Payouts for PMs at platforms without pass-through
The large platforms with pass-through expense structures offer payouts around 20 percent or more for senior PMs. There are also platforms without a pass-through structure, but which still offer contractually agreed payouts. I'm not sure, but maybe places like Capula, Capstone, Caxton, LMR or Symmetry may fall in this category (pls correct me if Im wrong on any of these firms). My question is what would be a typical payout at these firms ? I suppose it will be quite a bit lower, as the fund takes the netting risk here .
Based on the most helpful WSO content, payouts for PMs at platforms with pass-through expense structures typically hover around 20% or more for senior PMs. However, for platforms without a pass-through structure, where the fund takes on the netting risk, payouts are generally lower.
For firms like Capula, Capstone, Caxton, LMR, or Symmetry, while specific payout percentages aren't explicitly detailed in the WSO threads, it's reasonable to assume that payouts would be lower than the 20%+ range seen in pass-through structures. This is because the fund absorbs the netting risk, which impacts the overall compensation structure.
If you're looking for more precise figures, it might be worth exploring further discussions or threads on these specific firms on WSO.
Sources: Citadel Equities analyst terms, , Citadel vs. Millennium vs. Point72 vs. Other Multi-Managers, Performance of the best PM’s at MM’s?, HF Distribution of outcomes - by mid-30s
Usually no netting between books from my experience. Other then the pass-through the PNL math is similar, and often lower payouts than large pass-through places. Economics will almost always be better at the large platforms offering pass-through. The starkest contrast from what I've gathered seem to be on flexibility around your strategy and more tailored risk parameters (which for some could offer greater upside flexibility + seat stickyness).
Thanks. In terms of payouts, do you have a number what places like the ones mentioned in my post would offer?
2 years ago, one of the smaller MM platforms with a pass through structure offered me 16 percent plus an accelerator, but didn't make sense for me to make the move back then
It depends on the asset class. Multi-strats have different fee structures and payouts for different vol strategies.
My experience is in equities and most places tend to center around 20% PoR. I've seen as little as 15% and as high as 25% with pass-through, but for an initially smaller GMV, which then gets tiered down to 20% when GMV exceeds a certain level.
Thanks. I agree the ranges you mention make sense for funds with pass through, from what I have heard. What I'm curious about is how this looks like for funds without pass through
As I said initially, depending on strategy and from what I've seen, the math and PORs are similar, but with non-pass places are usually less scaled firms who tend to offer slightly lower payout ratios then the large platforms (but with greater bespokeness to how you run your book and risk limits). Most hover around 20% (15-25% range with the bull curve being centered around 18-20%).
I have seen as low as 8%. But I would think more typically 10-14% for funds without pass-through.
At my firm the performance fee is about 50% higher than the PM payouts. If somone makes a loss that exceeds the fund's total performance fee in a year, the winners receive IOUs for future years. The losers if they're not fired, have to make up the losses.
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