What do you guys think is a typical/fair compensation for an analyst (say age 28-32) in a large (>5b) established multistrat fund in NYC? What comp level do most people tend to flatten out at (and at what point in their career), assuming they do not become PMs?
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I've commented before on these types of threads and it depends 100% on your PM and fund and year.
But to take a stab at it, fair = $200k base, $200k bonus.
Bonus can be $0 or $750k though.
Just a few data points from my side. I worked in the London office of a USD 3 bn event-driven fund (we did merger arb, special sits and distressed debt) between 2013 and 2016. As a first year analyst with 3 years experience I was paid a base of GBP 85,000 which translated into USD 130K at the time. Bonus was roughly 1x base. A colleague of mine, who had about 5-7 years experience was getting a base of GBP 120,000 which was USD 180,000. I think he was earning roughly USD 500,000 all in. One of our PM's, after a few too many drinks in a swanky club in Mayfair, told us that one of the guys in the NY office, who was considered to be the best analyst on the team, was taking home USD 1m all in after a good year.
Generally people on this site overestimate buy-side HF comp. You hear stories of analysts at Elliott or York raking in big bucks but those guys are the best of the best and not at all representative of the average HF analyst. Also, PM's view you as replaceable and will give you the bear minimum needed to prevent you from looking elsewhere. Once you've survived the initial shake out period (generally 2-3 years) and start to generate decent ideas, you might get direct P&L linkage and that's where the real money can flow....assuming the PM doeesn't take credit for all your best ideas.
I got paid 300k all in despite exceptional individual and firm performance after 1.5 years on the buy side. I think my pay is probably far above average and most people I know make far less. I generally don't think performance has any clear relationship with pay. Pay might give you some job security but it doesn't really affect compensation. Your compensation is approximately equal to what you would have made if you had stayed in banking or PE if you are a good performer and I think you just get let go if you are a bad performer. It's honestly not a great deal until you get a book of your own money to manage. Frankly it's utterly bizarre the industry works this way.
Yep. At my firm (and most where I know the fund manager personally), junior and mid-level analysts are considered to be commodities until they can prove that they can consistently make PnL contributions to firm year after year. Up until that point, it makes no sense to pay our junior and mid-level analysts more than their replacement cost, given that the pool of talent available for hire at those levels is the deepest. The real differentiator in this business is if you can prove that you can be a consistent money-maker and be one of a handful of key decision makers entrusted to put the firm's capital at risk. I tell my analysts starting out that they already defied the odds by landing a seat at the poker table but now it's up to them to prove what their market value is. Over time, the truth is that, out of 10 analysts, 5-6 will be average (i.e., good enough to keep around to run down ideas, but not strong enough to be entrusted to be one of a handful of key risk takers for the firm), 3 will be below average and get shown the door, and 1-2 will be excellent. In those rare cases, we will do our best to retain them through promotion and by sharing our business with them by giving them meaningful economic ownership in the fund. But up until that point, you are being battle tested by your firm, and your experience is consistent with my experience.