Hey guys. Current recent here that’s interviewing with a small event driven HF here on the east coast. There’s about 5-6 people on the team and I believe sub 100 million AUM. What would comp look like for a first year analyst at a fund like this?
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Based on the most helpful WSO content, the compensation for a first-year analyst at a smaller hedge fund can vary quite a bit. However, it's generally noted that a first-year analyst at an established fund will usually be all in around $200-400k.
Your base might be a bit lower at a smaller fund, but the potential for bonuses could be higher, especially if you're heavily involved in the investment process. In such cases, you should be negotiating for a cut of the PnL.
Being at a smaller fund, you should be able to share in the PnL more, as there are fewer people, the risks are higher (so should the rewards), and small teams tend to want to grow people within the firm as training is expensive and finding a good analyst is difficult.
Remember, these are just general figures and can vary based on the fund's performance and your contribution to it. Good luck with your interview!
Sources: base/bonus 1st year analyst at HF, Large hedge fund analyst compensation, 2017 Hedge Fund Report: 8 Key Takeaways
I'd be surprised if they offered much more than low-100s base
I thought it was going to be like 70k for a fresh hard. Guess I was far off
Oh I thought you were coming from another fund because of your title. If fresh grad (?) then likely sub-100k
What about for a analyst out of college joining a 600M-1B SM fund founded a couple years ago? Would it be the same expected base?
They can afford to pay you 125k. Surprised if you get more than 150k (base).
Extremely unlikely you get contractual % cut of profits. Bonus yes, but that's discretionary not fixed %.
Low-100s base, you should ask for 5% of performance fee.
Just remember 5% of a 0 is still a 0 if you don't think the fund can scale
If I was joining a 600M-1B SM fund which was founded in the past couple of years out of college, should I also expect the same low 100s base? Also, should I expect to get any cut of the performance fee? Can't find any information on this anywhere and want to know what to expect
You should not expect % of performance fee at this fund scale.
Nobody is going to give you a fixed percentage year one coming out of undergrad.
Ok thank you for the information I appreciate it
Sub $100m AUM for an HF is a little scary. I don’t really get how the math even works in most cases.
I’d be surprised if they offer over $100k - $150k base.
Sounds like they way overhired as well. $20M per Investment Professional? Your bonus might be like $20k
Definitely
100aum sm = 300aum pod. That is the trade off the founder is looking at very likely.
Ah, I meant the math for the fund with $100m in AUM is very tough unless they deliver insane returns. The bar is quite high and if they don't meet it quickly, they are in a bad spot.
Tough to run an HF with only $100m in AUM nowadays. I guess it depends on the strategy but OP mentioned quite a few people hired already...many more than you would think for a fund that size.
I am in a similar position where I am joining a start up fund (2/20).
This is the comp package that I'm looking to land:
Base - 10% of fund management fee subject to a $100,000 min and a $200,000 max.
Bonus - 2% of the fund performance fee.
Equity - 10%
Wow. Are you coming out of college???
Sorry, no not coming out of college.
My position is similar to the original post in that I'm joining a hedge fund start up looking to raise up to $100m in initial seed capital. Plans to grow significantly in the next few years (obviously a lot will depend performance).
Makes sense (to me at least) to have my base compensation = to a fixed % of the management fee in the early days whilst the fund is still finding its feet. But, I'm no Wall Street veteran so not sure if this is a thing.
Bonus and equity levers are exclusively based on performance, so no burdensome fixed overheads their either.
Consider the math… In a start up HF with $100m and they make 20% in returns that leaves $20m in profits and the HF will keep 20% of this which leaves $4m in revenue for the firm from the profits and 2% of the $100m which means the firm overall will have $6m in total firm revenues. Office space, Bloomberg terminals, lunch/meals, trading fees, news subscriptions, data subscriptions, etc will all run maybe $500k-$1m per year, leaving maybe $5m in funds to cover salaries/bonuses to be split between the 6 employees/workers.
The lead partner/founder of the firm will want the biggest share of they will probably keep at least $2-3m for themselves. Meaning the other 5 employees are fending to over the remaining $2-3m. The top 2 of the remaining 5 workers will probably take at least 60-80% of what remains leaving the rest ($400k-$1.2m) for the 3 most junior employees. And if you’re the least experienced then you’ll get the smallest chunk. So realistically, you’re probably going to only get $150k all in during a good year during your year 1, but might be able to get a little more year year 2-3.
lol if you tink the top guy si keeping 2 - 3m and not 4m
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