How much can AM MDs make?
I came across this WSJ article (linked below) on a PIMCO MD, showing his Aspen mansion with Picasso's on the walls. I knew these guys made big money, but I didn't think they made Picasso-buying money.
How much do you think top MDs at AM shops like PIMCO can make?
Depends upon how much you manage and the asset mix (i.e. equity vs. fixed, long only vs. HF).
Let's take a top long only, 100 % equity fund with $30 billion AuM. Let's assume the management fee is 1% and there is only one PM. The other 9 employees are analysts with an average experience of 7 years and don't have any equity interest in the profits (this would never happen by the way). Back office, marketing, and other costs for a fund this size are probably $30mn.
30bn AuM * 1% management fee = 300mn - back office costs $30mn = profit before comp = $270mn - 9 analysts * 1mn average comp = $9mn = profit after comp ~$260mn
Now, most $30bn funds are either part of a publicly traded company or a very large partnership (i.e. Wellington), so a large amount of this comp would go to your shareholders / partners. If you were sole PM, could you make $50mn+ a year? Absolutely. Could you make $100mn+? Depends upon your bargaining power. If you're Bill Gross, you're probably capturing the majority of that profit after comp.
At the largest asset management firms, senior partner/MD compensation can be in the 10s of millions, easily.
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