If you make it to the upper echelons of a hedge fund the potential rewards can be great. Portfolio managers and ‘idea generating’ researchers can earn millions – with pay predominantly weighted towards bonuses, which have yet to come under the heavy hand of the regulator.
This year, bonuses are set to increase by an average of 5-10%, according to analysis by executive search firm Glocap. Unless you make it to partner level, however, pay stays out of astronomical spheres and remains decidedly down-to-earth – at least by some standards.
If you wanted to earn the most on an average pay per head basis, the best bet for the last year was BlueMountain Capital Management, according to our analysis of the latest filed accounts for a select group of prominent UK hedge funds. It doubled pay for its staff this year, following a successful bet on the other side of JPMorgan’s ‘London Whale’, and paid an average of $766.2k to its employees and $11.6m to its three partners.
Meanwhile, Capula Investment Management, the fixed income focused hedge fund set up by ex-JPMorgan prop trader Yan Huo, allocated an average of $688k to each of its 66 employees and paid nearly $11m on average to its employees.
Brevan Howard also pays well, and offers more career opportunities than most funds, employing over 170 people. However, more recently it’s been scaling back and relocating front office staff to Switzerland. Similarly, Man Group – by far the largest hedge fund employer in the UK, according to 2012 figures – also pays well, but has been rolling out redundancies in the last 12 months.
What’s more, these averages – much like the mean compensation in investment banks – include support staff as well as investment employees. Without this included, expect the average remuneration to be decidedly higher.