How often do late 20s/early 30s analysts or PMs make low 8 figures in the HF industry? Obviously 2020 was an outlier with strong performance, but is this something that happens reasonably often in the industry (either MM or very large AUM SM)? This is assuming strong performance for both the analyst and the fund of course
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Means $5 million, as anyone that has worked in the industry would know.
A term known by many but used only by tools
It happens frequently and if you are joining a HF you should count on it
No, this doesn’t happen frequently enough to bet on it being a likely outcome. The rule of thumb I’ve heard is that a primo track is if you can secure a stable long-term seat where your baseline comp is 1-2m, and you can play for 1-2 blow out years along the course of your career where you can have a 5-10m payday.
Age is irrelevant in the HF business. There’s this notion of making 1-2m at a HF by the time youre 28, as if that has some inference on where you go from there. It doesn’t. Whereas in banking/PE the understanding is that your comp will continually grind higher as you progress through your career.
The big mistake people make in going to the public side is they hear an anecdotal tail outcome, and because of the way these tall tales and rumors are passed around, it’s presented to be a likely outcome. And so people make real life decisions off that highly flawed construct. Then they get to a HF and realize the path to making real money is about as likely as becoming a pro football player, and staying healthy long enough to have a long career, and performing, and being on a solid team that gets to a few Super Bowls, and winning a few of those Super Bowls.
Let's look at a place like Elliott for example. They put up 13% last year. How much do you think an analyst (say late 20s, early 30s) or PM (maybe early to mid 30s) made? Over $10mm?
Elliott is notoriously stingy and underpays.
Separately, just because there’s a lot of money to go around, doesn’t mean it goes around. This is Wall Street, not a Swedish teachers union. If you contribute directly to an outcome, you get paid for it. You don’t get paid 8-digits just for showing up because the firm had a good year. There is no $10mm participation ribbon. Not at Elliott, not at ThirdPoint, not at Viking Global.
Break down the math for a fund like Tiger Global. $41bn AUM, 48% in 2020 (I think around there), 2 & 20 fee structure. $41bn * 48% * 20% = $3.94bn GP Share
If you are a partner at Tiger Global (there are guys in their late 20s/early 30s that are partners there), you're gonna make a lot. Tiger Global runs super lean, but let's be conservative with the carry. Say a first year partner gets like 50 bps of carry...that's 20 bucks. 75 bps is 30 bucks...
50 and 75 bps aren't a lot, but because of how lean Tiger Global runs, it amounts to a heck of a lot. I have absolutely no idea, maybe a partner gets 100bps or more. Guys, I don't really have any actual stats on this stuff, so if anyone could verify this or gimme some feedback I'd really appreciate it. Because of what it means to be a "partner" and how lean Tiger Global is, I assume that this math checks out, but the numbers are still mind-boggling. But maybe that's just because were talking about a 50% year at the most elite shop out there. Who knows. Look at guys like Kimball and Schneider (who left for Addition recently) who are/were partners at Tiger Global. Do you guys think they cracked $20-30mm last year?
BTW, does this math apply to any of the top funds??
You’re taking the best hedge fund in the universe, and using that as a proxy for what HF earnings can be?
That’s like assessing whether you should play golf in high school, and crunching the numbers on how much Tiger Woods has made in prize money + endorsement deals... and concluding that you can make $1-2bn across your lifetime playing golf.
I think we should be fair with people on this site, low 7 figures in your late 20’s and early 30’s is pretty rare, even in the HF industry. Probably better than calling things “crazy” it would be better to give rough percentages and of course include the universe you are talking about.
At the end of the day that kind of payday is top 1-5% across funds (probably on the lower end) and about 5-10% at “mid/top” funds (and different depending on type of fund, etc).