About to be promoted to senior analyst, wondering what the usual carve out is at large MM HF (Big 4) and how compensation is structured in terms of % of P&L etc.
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Congratulations on the upcoming promotion! In the realm of large MM HFs, compensation structures can vary, but here's a general idea based on the most helpful WSO content:
Carve-Out: This refers to the amount of capital you're responsible for and can vary widely. At a large MM HF, you might expect a significant amount of assets under management (AUM) to be allocated to you as you prove yourself.
Compensation Structure: Typically, the compensation at a hedge fund for a senior analyst might include a base salary plus a performance-based bonus. The bonus can be a percentage of the profits generated from your investment decisions (P&L).
P&L Percentage: The specific percentage of P&L that goes to the analyst is highly variable and can be influenced by factors such as the fund's overall performance, the individual's contribution to profits, and the fund's compensation policy. Deals can range from approximately 10 – 20% of total P&L, which is quite high relative to pay in other areas of finance.
Additional Factors: The total compensation can also be influenced by the fund's leverage and the performance fee structure agreed upon between the platform/GP and the PM/analyst teams.
Remember, these are general guidelines and the specifics can differ based on the fund's size, strategy, and performance. It's always a good idea to discuss with your HR department or refer to your offer letter for the exact details of your compensation structure.
Sources: LO to MM HF?, Help us determine a fair compensation structure and non-competes for a new HF, What I've Learned About Hedge Fund Structure and Compensation, Q&A: Big 4 Consulting to Lower MM IB to MM IB (No MBA)., LMM PE Associate Experience - What is it REALLY like?
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