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?
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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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