SM Down Year Comp
What’s comp for a senior analyst at a multi B SM in a down year, assuming they performed in line with the fund? I was thinking $500k to $1mm (assuming a few years of HF experience), but does that sound too low or high?
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$1mm sounds too high, but it’ll depend on size of investment team (and overall headcount), fee structure, how generous the management team is, etc. There are very few jobs out there that guarantee $1mm, less that do this for someone in their late 20’s. There are a wide range of SM funds out there, some run very lean, others less so (and the lean ones are trying to pick that 1 person who is the “best” out there), many are also competing over a relatively limited talent pool (depending on strategy, etc).
That being said at the very top and lean places you’ll see around that number, but I haven’t seen that as standard for the relatively junior roles you call out (~5yrs of experience). It is always a balancing act of paying a person well so they don’t leave (especially if you run lean and think they are important to your process) but actually paying people based on the fund financials (and highlighting that this is a risk taking career). Many places are very guarded about their comp (for good reasons) but I’ve seen closer to the lower end of your numbers, but again rumors (that I’ve only heard about 3rd hand, so who knows) around tiger funds and others point (or pointed to, this year is different) to higher.
Not OP but curious myself. To put some more specific figures around it, let’s say it’s a $2bn fund with 10 IPs and this would be for a junior analyst with 2+2 IB / MF PE background. Any sense of a reasonable range (understanding that there are lots of variables at play here)?
Well at $2bln you are collecting $20-40mm in fixed fees (depending on fee structure). In a down/flat year that is all you have to work with (and in a down year you probably have redemptions and lower fees the next year due to AUM). So remove costs (ex salary), so rent, tech, data - these numbers can be all over the place. Some quant like places will have large data and tech costs, that can eat into 50% of that fixed fee revenue (or more) and you want to maintain a buffer.
But either way, your bonus will be low, with that experience (2+2) you are probably somewhere between $350-600k all in (yes very wide range, will depend on fees and how generous the partners are), I would bank more on around $400 on a flat year.
Would guess 400-600k in a down yr.
I haven’t worked at SMs but the old adage is that you get paid just enough so you don’t leave. The number of analyst seats where you can make a buck or more, especially coming off of marketing a down year are fewer than they used to be, so my guess is the CIO/PM would not be so generous in that situation.
Honest question, where are they going to leave for? All these shops are down, some -20% some -50%.
Pod shops galore
That’s not true, there are definitely some big names that are down big. But there are also others that are anywhere from down a little to up a bit (and if you venture outside of pure equities up a lot - but that’s only applicable if you are more than just a pure equities analyst/manager). The splashy headlines are what often gets talked about, but there are plenty of funds navigating the current environment well.
$300-400k
also depends on deferred comp situation some guys will be getting big paychecks off returns from 2020 and 2021
Yeah, but I wouldn’t count that toward what people get paid in a down year. Those are bonuses paid for performance from previous years, similarly, if you have a down year you won’t be getting anything deferred the following years. You are making a point about today (with the assumption there are big payouts from previous years) vs the general point about what people get paid in a flat/down year. I always count my pay as what I earned in the year (whether it is paid that year or not), as I have earned it and if I were to move I’d make sure that is bought out. You may want to discount it a bit as you don’t have the money in hand, but in general (if you move firms or stay) you will be collecting that.
no concrete #s to add, but "multi billion" is a wide range - a $2B fund is going to pay very differently than lone pine
Still leagues better than MM comp in a down year
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