Imagine you’ve had a terrible year. Your fund is underwater, you’re lagging the competition and 2015 is turning into a year to forget. In such circumstances, any bonus payments should be minimal going on derisory, right?
Well, not so if you’re a portfolio manager at a hedge fund. At medium-sized hedge funds where the average rate of return was close to -4%, portfolio managers still received a mean bonus of $202k, according to new figures provided by headhunters Glocap. Base salaries were $240k, meaning that total comp came in at $442k.
This represents a 17% decrease on 2014 (last year, poor performing funds were down closer to 3%), but lest we forget Goldman Sachs paid its bankers an average of $379k last year.
Hedge funds are surprisingly inflexible when it comes to base salaries, suggests the Glocap report. “Some hedge funds say ‘our bases are non-negotiable at $150k for a senior analyst,’” it says.
For portfolio managers, regardless of performance, base salaries are $240k, according to its figures. In the world of hedge funds, the real money is still in the bonus.
This year, bonuses averaged at close to $1.7m, a 10% decline on 2014 when they were $1.9m.
This is a hefty sum, but bare in mind the risk of hedge funds folding. – 417 funds went under in the first half of 2015, according to the survey, compared to 864 for the whole of 2014. 516 funds were launched over the same period. In hedge funds, even more than in investment banks, you are paid well – but your career with that fund may not necessarily last.