In the 2018 Hedge Fund Compensation Report, we examine industry trends that affect compensation. In an industry that was mired in underperformance for the past three years. Additionally, this year marks declining industry outflows and greater assets under management – a record high of around $3.25 trillion – despite the fact that hedge fund closures outpaced startups through much of the year.
The Hedge Fund Compensation Report reveals that some hedge fund professionals have not entirely accepted their own good fortune. While positive sentiments for increased earnings have grown in some pay bands, that sentiment stayed flat in others, and certain pay bands expressed negative expectations as compared to last year. That said, 53 percent of respondents anticipate higher earnings this year.
This year’s report reveals a higher level of correlation between bonus pay and performance than we have seen in recent years. This is particularly evident in firms with negative gains. The respondents working in such firms continue to expect bonuses, but at a depressed level compared to previous years.
On the subject of performance, the 2018 report reveals that 83 percent of our respondents are working in firms with positive gains, 40 percent in firms expecting gains of 10 percent and greater. Last year, we saw 72 percent of respondents in firms with positive gains.
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Some of the highlights from this year’s report include:
- Twenty-seven percent of hedge fund professionals expect to earn the same take home pay as last year
- Managing directors were the top earners this year
- Respondents working in firms with 11 to 49 employees received the highest levels of compensation
- The United Kingdom is home to the highest paid hedge fund professionals
- Sixty-nine percent of firms use a combination of factors to determine bonus pay
- Eight-nine percent of hedge fund firms pay a one-time annual bonus and only 24 percent of bonuses are paid out in December
- Just a small 8 percent of senior associates are happy with their level of compensation