SM HF comp expectations?
I know it's heavily tied to performance (overall fund and personal) but what's the general comp progression like at a single manager l/s tiger cub?
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There's not really a general comp progression like there is in banking and PE. Generally a salary somewhere between $125-250k, plus a bonus that can be discretionary or formulaic based on a percentage of p&l, alpha, or some other formula. Bonuses can vary wildly. If you perform well at a lean (high AUM per IP) fund, you can make well in excess of a MF PE partner. You could also get fired and get no bonus. It's impossible to generalize because the industry is so heterogeneous.
How much are MF pe partners making on average?
I've heard $2-5mm. Not everyone has killer deals lol. Very much in line with SM HF partner at call it $1-5mm and pod PM at $500k - $10m+
feels much more realistic than other posters that have said “omg PE partners take home 10-20 per year including annualized carry!!!”
A $10bn fund at 2x gross is $2bn of carry / 1.5x is $1bn of carry. Most funds are shared pools and most reporting is shown net (so a 1.8x is a 2.0x gross). I count 16 investment team partners (19 total partners at Leonard Green) who fwiw has a $14.7bn fund / $3.6bn smaller fund so $18.3bn current pool but assume that’s staffing for a $10bn fund. Assume top 4 guys take 50% of pool and 10% to non-partners.
Next 15 partners on a $10bn fund are splitting either $400m or $800’ in carried interest. If you are raising funds every 4-5 years, pretty hard to see how TC is $2-5m for the average MF partner, especially if you layer in $1m or so in cash comp. You can swap out the top 4 guys for public shareholders / stock options for publicly traded PE funds.
I have seen the carry pools for quite a few PE funds (worked at a firm with a FOF platform earlier in my career) and the $2-5m number is probably low for the average partner at a fund with latest raise > $3bn.
Fyi, Goldman has allegedly changed their carry pool to 40-50% for investors because it’s considered the market rate.
Source:
https://www.bloomberg.com/news/articles/2023-11-06/goldman-boosts-pay-i…
What is considered high AUM per IP for a SM HF
I'd say >$1bn per IP is considered high. Pershing and TCI are a few examples. You can do the math on 15% returns x 20% performance fee x $1bn per IP. Obviously only a portion of that would go to the analyst/partner.
At a semi decent SM out of 2+2, you’re looking at 4-500k
This is correct and the only real answer in this thread.
Right out of 2+2 at a scaled HF ($3bn+ AUM), $350-500k for your first year or 2. Then VERY variable based on performance, style/model, and personality of the founder(s).
One misconception is that there’s so much $s floating around that you’ll make a boatload of money just by showing up to work. Not really how it works. Sure maybe you’ll make $600k-750k in your second year if the fund has a monster year, but just because there’s a $150m bonus pool for 10 guys to split, doesn’t mean you get a multi-millionaire dollar participation ribbon, unless you have tangible contributions to that outcome (in which case it’s not a participation ribbon).
Also a single years comp means nothing for future years. Unlike most professions, your current year comp is not the floor for all subsequent years.
Agreed. If the firm/team crushes it, you better be making 7 figures (which is rare) otherwise it’s not worth the career risk.
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