In this, its twelfth year of publication, the 2019 Hedge Fund Compensation Report takes a different approach, one that focuses on broad metrics that repeat year after year, as opposed to year-over-year comparisons which offer readers a much narrower scope. These time-tested observations will better serve our goal of conveying the manner in which trends have shaped compensation in the industry.
2018 had been a year replete with difficulties in the hedge fund industry. It was a year which began with boundless optimism and ended with no small measure of concern for the future of the industry. Hedge fund professionals are no strangers to this level of pessimism, and, although for most of 2018, hedge fund starts exceeded hedge fund closures, it remains unclear if a net gain for hedge fund starts has been achieved.
However, this year has not been an altogether negative one for the hedge fund industry. Hedge fund assets under management are on track to achieve a record high, expected to exceed $3.5 trillion, which sends a strong signal of continued investor support for the industry.
So, instead of focusing on a snapshot in time, particularly a time as tumultuous as the one this year has delivered, we have concentrated our efforts on delivering time-tested truths regarding compensation in the hedge fund industry.
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Some of the highlights from this year’s report include:
- One in five hedge fund professionals earns less than $150,000 in total annual compensation
- Only 2 in 100 hedge fund professionals earn over of $1 million in total annual compensation
- Around 50 percent of hedge fund professionals expect an increase in total compensation, regardless of their firm’s performance
- While the United States and the United Kingdom offer the highest total compensation packages, the United Kingdom is often more generous in terms of bonus pay
- Irrespective of bonus and base pay increases, around 60 percent of hedge fund professionals are dissatisfied with their pay
- MBAs are odds-on favorites to out earn peers that do not have an advanced degree
- Twenty percent of hedge fund professionals define their work/life balance as poor, or below average
- Fewer than one in four hedge fund professionals receive a contractually guaranteed bonus
- Around 50 percent of hedge fund professionals identify their firm’s training as weak or non-existent