Multi-Manager Terms for Global Macro (Quantitative or Discretionary) Traders and PMs,

Hello,

I have seen a lot of terms for the compensation and risk controls for Portfolio Managers (PMs) at multimanager hedge funds, but a lot of the terms are applicable only to Long-Short (LS) Equity traders; for example GMV has no application to futures traders.

Can knowledgeable parties share a redacted term sheet or offer letter for Global Macro (Quantitative or Discretionary) traders, who trade using futures. Alternatively, a response just sharing indicative terms for Global Macro (Quantitative or Discretionary) traders will be appreciated.

Information requested is threefold:

Compensation terms and structure
Risk Controls/Rules
Range of typical capital allocation in US$

Thank you!

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2 Comments

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Based on the most helpful WSO content, here is the information relevant to your request regarding terms for Global Macro (Quantitative or Discretionary) traders and PMs:

Compensation Terms and Structure

Compensation: Typically, compensation for PMs at multi-manager hedge funds includes a base salary plus a performance-based bonus. The bonus is often a significant portion of the total compensation and is tied to the performance of the portfolio managed by the PM.
Bonus Structure: Bonuses are usually calculated as a percentage of the profits generated by the PM's portfolio, often with a high-water mark to ensure that bonuses are only paid on net new profits.
Deferred Compensation: Some firms may include deferred compensation components, where a portion of the bonus is paid out over several years to align the PM's interests with the long-term performance of the fund.

Risk Controls/Rules

Risk Limits: PMs are typically subject to strict risk limits, which can include maximum drawdown limits, value-at-risk (VaR) limits, and position size limits.
Leverage: There are often restrictions on the amount of leverage that can be used, particularly for futures traders.
Stop-Loss Orders: Mandatory stop-loss orders may be in place to limit potential losses on individual trades.
Risk Committees: Many firms have risk committees that regularly review the risk profiles of individual PMs and their portfolios to ensure compliance with the firm's risk management policies.

Range of Typical Capital Allocation in US$

Capital Allocation: The capital allocated to a PM can vary widely depending on the size of the fund and the PM's track record. For Global Macro traders, typical allocations can range from $50 million to several hundred million dollars.
Scaling: Capital allocations may be scaled up or down based on the PM's performance and the overall risk environment.

This information should provide a comprehensive overview of the typical terms for Global Macro (Quantitative or Discretionary) traders and PMs at multi-manager hedge funds.

Sources: Q&A: Head of Macro Strategy at Hedge Fund Taking Questions, Global Macro Hedge Fund is Paradise, Global macro recruiting - a primer, Q&A: The Future/Current State of S&T - BB VP Macro Trader, Q&A: BB Fixed Income Trader, 2nd Year Analyst

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Multi-Manager Terms for Global Macro (Quantitative or Discretionary) Traders and PMs,

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Compensation Terms and Structure

Risk Controls/Rules

Range of Typical Capital Allocation in US$

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Multi-Manager Terms for Global Macro (Quantitative or Discretionary) Traders and PMs,

Compensation Terms and Structure

Risk Controls/Rules

Range of Typical Capital Allocation in US$

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