I currently am a first year analyst at a mid-size hedge fund (~$2bn AUM) with no bonus guidance. Based on my discussions with industry peers and past WSO threads, it sounds like the typical comp range is $100-125k base plus $100-200k bonus in a normal or good year. However, the fund is having a bad year (down >10% YTD).
Does anyone have insight on whether the ~$100k bonus is a reasonable lower bound for an analyst who presumably has little ability to influence fund performance, or if the bonus could be significantly lower than that?
When I was a junior analyst at a USD 3 bn event driven fund I still got paid in the bad years as my comp was not tied to any P&L. My PM told me that generally speaking funds view paying junior guys as part of the overall cost structure of running a fund. Obviously the higher up you get the more your comp is tied to your calls and you have much more volatility in your overall number. At the junior level comp is more tied to your work quality and if the guys on the team like you. Having said all this each fund is different so take with a pinch of salt.
Sure, happy to help. I joined the fund in June 2013 as a junior analyst and left after 2015 (2.5 years) and got 3 bonuses during that time. 2013 was a great year for the fund and I got my base again but pro-rata for 6 months of work. 2014 and 2015 were tough years with the fund posting slightly negative returns in each of those years. Despite this, I got 75% of my base in each of 2014 and 2015.
Funnily enough, I found the transition to the HF space to be a tough one and I felt completely out of place in my first 3 months on the job but managed to pull it together by year end and was pretty shocked to be given 100% of base that year. Fast forward to 2015 and I had become a good analyst generating lots of ideas and doing solid work and yet I got paid less given the overall weaker performance of the fund.
No base bumps over that time period. I think the real focus is on getting linkage to P&L which leads to the real money in this business. Basically if you're good and generate money-making ideas you will start to earn respect and trust and it will be easier to get your ideas into the portfolio. Top analysts at my firm (+5 years experience at the fund), in our NY office, were taking home over 1MM USD a year and I would assume a huge chunk of that was bonus money.
It's a fairly simple path actually, you progress into an idea-generating analyst who eventually gets P&L linkage or you don't and leave the industry or look for a seat at another fund. I left the industry to join a long only deep value fund as I was sick of the short term nature of the event driven strategy.
Agree with what Gray Fox said below, funds usually invest a lot of time and money to make sure they hire junior people that they believe can grow with the firm and will buy into their strategy. Also, investors hate turnover as it may indicate problems at the fund and it takes up valuable research time interviewing new candidates. Having said this, you have no leverage and funds will fire you right away if they think you're a cocky bastard and start asking for more money in your earlier years.