Both hedge funds and asset management firms hire a handful of graduates each year. Breaking into either sector requires excellent academics, multiple internships and a level of persistence that usually necessitates a restraining order. But if you want to target one part of the buy-side and are motivated by earning potential our advice to you is this - join a hedge fund. And, if you wish to specialise in a particular asset class, join an equity hedge fund.
Recent reports have suggested that bonuses are hedge funds have been tumbling. New research from recruiters Kea Consultants suggests that pay at hedge funds is still very, very good. Base salaries for recent entrants to both asset management firms and hedge funds are relatively similar - at £67.4k and £74k respectively after 2-4 years' experience. However, total compensation is £131.2k-£146.2k at an asset management firm at this level and £165-196k at an equity hedge fund. After this, the gap becomes a chasm.
As the charts below show, after 4-6 years' experience, analysts at equity hedge fund managers are hauling in £260-655k in total compensation, compared to a 'mere' £176-185k in asset management. After this, Kea Consultants' research doesn't allow for comparison, but it does show that equity hedge funds pay their senior analysts an average of £675-900k, compared to £485-555k at a credit hedge fund.
Source: Kea Consultants