comp for 200 vs 400mn/analyst

Based on the most helpful WSO content, here's what you need to know:

For a fund with a 1.5% management fee and 20% incentive fee structure, the compensation for a first-year analyst can vary significantly depending on the fund's size, performance, and assets under management (AUM) per analyst. Here's a breakdown:

1. $200 million per analyst:

   • Assuming a 1.5% management fee, the fund generates $3 million in management fees.
   • If the fund achieves a 20% return, it generates $40 million in performance fees (20% of $200 million × 20% return).
   • Total fees available: $43 million.
   • After accounting for costs (typically ~40%), the remaining pool for compensation is ~$25.8 million.
   • With fewer analysts, the compensation pool per analyst is higher. A first-year analyst at such a fund could expect $200,000 to $400,000 all-in compensation, depending on their involvement in the investment process and the fund's performance.

2. $400 million per analyst:

   • With a 1.5% management fee, the fund generates $6 million in management fees.
   • If the fund achieves a 20% return, it generates $80 million in performance fees (20% of $400 million × 20% return).
   • Total fees available: $86 million.
   • After costs (~40%), the remaining pool for compensation is ~$51.6 million.
   • With more AUM per analyst, the compensation pool per analyst increases. A first-year analyst at such a fund could expect $300,000 to $500,000 all-in compensation, again depending on performance and their role.

Key Takeaways:

• The higher the AUM per analyst, the larger the potential compensation pool.
• First-year analysts at funds with $200 million/analyst might see $200K–$400K, while those at $400 million/analyst could see $300K–$500K.
• Performance, fund costs, and individual contribution to the investment process heavily influence these figures.
  
  Sources: base/bonus 1st year analyst at HF, AM vs HF: The Business of Our Business, Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role, https://www.wallstreetoasis.com/forum/investment-banking/2017-investment-banking-report-8-key-trends-to-know?customgpt=1, 2017 Hedge Fund Report: 8 Key Takeaways