8 figures for late 20s/early 30s HF employees
How often do late 20s/early 30s analysts or PMs make low 8 figures in the HF industry? Obviously 2020 was an outlier with strong performance, but is this something that happens reasonably often in the industry (either MM or very large AUM SM)? This is assuming strong performance for both the analyst and the fund of course
Comments (88)
Lol no
The few who do you'll hear rumors about hear and there. Not frequent at all.
Not 8 figures, but I heard a 31 year old at my firm pulled down 5 bucks this year. 8 figures happens but not too often--low 7 figures happens quite a bit but is definitely far from the norm.
5 bucks?
Means $5 million, as anyone that has worked in the industry would know.
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Learn moreidk why but the 5 bucks term cracks me up
Analysts, it rounds down to never. PMs, it's very rare but not entirely unheard of.
Low 7 figures possible if you're at sizeable fund w/ good performance like 2020. Definitely have not heard of low 8 for analysts.
Extremely rare. Does happen but you hear the rumors because of how few people do it. 7 figures (2-5mm) is pretty solid/top of what you'll see at that tenure.
Right combo of big enough trade plus fund large enough to really move P&L it's possible. Say you're at a single manager single PM type shop with $10b+ AUM. If you originate a $500m+ trade that triples in a year, I could see them allocating 8 figs to you. But like posters above me said, very few and very far between.
It happens frequently and if you are joining a HF you should count on it
Have heard this has happened a few times at funds like Pershing Square, Viking, Coatue etc. Those types of funds have insane economics in terms of money per head but it also mean you have a less than 5 percent chance of getting an interview at one of those funds let alone an offer. Those really good activist funds/tiger funds are the only place IMO where eight figures is possible by late 20s/early 30s.
The multimanagers?
Troll question, but I'll bite. It is significantly harder to make 8 figures by early 30s at a fund than in the NBA or some tech startup. Finance is especially bad for this numbers wise. The joke behind hedge funds is every little monkey thinks the exception is going to be them.
I have heard of 2 in the past 5 years who have done this at SM in very exceptional circumstances and not consistent. Viking/Pershing - both were 20-30mm range.
At MM, there are a few super star traders who can do this, but we are talking less than 5 across the whole street. I know of 4 here and two almost hit 9 figures once in early 30s - usually in macro products not in l/s - blowout type years like 2020
To put numbers around it at an MM, you need to put up north of 50mm in PNL, which means you are running a book of 500MM+ AUM and have a (2 Sharpe @ 500mm, 1 Sharpe @ 1bn, etc) due to drawdowns.
How many early 30s could raise a 500mm+ fund and your have your answer
No, this doesn't happen frequently enough to bet on it being a likely outcome. The rule of thumb I've heard is that a primo track is if you can secure a stable long-term seat where your baseline comp is 1-2m, and you can play for 1-2 blow out years along the course of your career where you can have a 5-10m payday.
Age is irrelevant in the HF business. There's this notion of making 1-2m at a HF by the time youre 28, as if that has some inference on where you go from there. It doesn't. Whereas in banking/PE the understanding is that your comp will continually grind higher as you progress through your career.
The big mistake people make in going to the public side is they hear an anecdotal tail outcome, and because of the way these tall tales and rumors are passed around, it's presented to be a likely outcome. And so people make real life decisions off that highly flawed construct. Then they get to a HF and realize the path to making real money is about as likely as becoming a pro football player, and staying healthy long enough to have a long career, and performing, and being on a solid team that gets to a few Super Bowls, and winning a few of those Super Bowls.
Age is not completely irrelevant. In the HF industry, tails generally fatten up over time. The top 40 year old PM is going to make way more than the top 30 year old one, as it takes time to accrue AUM, alpha, etc. Whereas in the sports world you generally lose athletic ability as you age. Both are very competitive, somewhat zero-sum industries where skill is linked directly with profits.
Of course, a downside to trading is that it doesn't come with any of the social benefits of being an athlete.
It's as likely as me getting poon these days
hang in there
Thanks bud!
Down bad
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How is this even possible with the risk limits that come with MM Capital? From all my buddies in MM's at least in long/short equity, they say getting a 10% return on their book is a crazy good year and very rare.
If there is a ton of volatility in the mkts, you catch the right thematic trade, and get really lucky
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I heard some folks at Jane Street (not a fund... i know) pulled low 8 figs in 2020. But it was an absolutely stellar year for them. Anyway, it's extremely uncommon. Honestly, there aren't many place now where new employees can get that much.
My PM crushed it our first year and he fit this age range. Think he made a shade over $10M. From my limited experience, that type of performance is pretty unusual and even more so at such a young age. Like others have said, it's similar to being an all star professional athlete. In other words, don't bank on it.
Was your PM at a SM or MM? Also, if he was at an SM, was it one of those top notch tiger cubs? I'd love to hear about him and how he did in future years in terms of comp
Was at a MM. Team has since grown to manage multiples of what we were doing at the time and he's cleared 8 digits in comp more than once now.
Let's look at a place like Elliott for example. They put up 13% last year. How much do you think an analyst (say late 20s, early 30s) or PM (maybe early to mid 30s) made? Over $10mm?
Elliott is notoriously stingy and underpays.
Separately, just because there's a lot of money to go around, doesn't mean it goes around. This is Wall Street, not a Swedish teachers union. If you contribute directly to an outcome, you get paid for it. You don't get paid 8-digits just for showing up because the firm had a good year. There is no $10mm participation ribbon. Not at Elliott, not at ThirdPoint, not at Viking Global.
Makes sense. I assume your'e paid on like a personal performance basis; if you put on a $500mm - $1bn position that nets the firm maybe $300-500mm, then I would imagine you get paid like $15-20mm -- that implies like a 3-6% cut. But activism seems hard and putting on a position that successful seems hard
In an average year, how much do you think analysts, APMs, and PMs at Elliott pull in? And would you agree with the work above?
"Swedish teachers union" made me chuckle, thanks for that
How much do analysts make at third point on avg?
these questions are so dumb
300-400k ai, like any other HFs
Break down the math for a fund like Tiger Global. $41bn AUM, 48% in 2020 (I think around there), 2 & 20 fee structure. $41bn * 48% * 20% = $3.94bn GP Share
If you are a partner at Tiger Global (there are guys in their late 20s/early 30s that are partners there), you're gonna make a lot. Tiger Global runs super lean, but let's be conservative with the carry. Say a first year partner gets like 50 bps of carry...that's 20 bucks. 75 bps is 30 bucks...
50 and 75 bps aren't a lot, but because of how lean Tiger Global runs, it amounts to a heck of a lot. I have absolutely no idea, maybe a partner gets 100bps or more. Guys, I don't really have any actual stats on this stuff, so if anyone could verify this or gimme some feedback I'd really appreciate it. Because of what it means to be a "partner" and how lean Tiger Global is, I assume that this math checks out, but the numbers are still mind-boggling. But maybe that's just because were talking about a 50% year at the most elite shop out there. Who knows. Look at guys like Kimball and Schneider (who left for Addition recently) who are/were partners at Tiger Global. Do you guys think they cracked $20-30mm last year?
BTW, does this math apply to any of the top funds??
math pretty much matches my napkin math, but remember that this is for a 48% year. In a 7% year, the numbers would adjust heavily haha
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This math, as basically everyone else has said, is stupid.
Calling it napkin math is being very generous.
It's more like used toilet paper math. Because these are meaningless scribbles on a piece of crumpled up tissue with smears of shit all over it.
No sensible person would write on it, nor would such writings be legible. If some blubbering mad man were to think it a worthy pursuit (Im thinking the homeless guy in Grand Central wearing a dress made out shredded newspapers from 1999), just imagine the mental competence of the person who goes a step further to touch that used toilet paper, much less examine it and use it to make life decisions.
I guess what I'm trying to say is... wash your fucking hands.
Nothing wrong with the math. Where you're really off base is that you're assuming all of the 41 billion dollar is in the hedge fund they manage which is just wrong. Tiger manages venture/growth capital funds, a long only fund and a hedge fund and approximately half of their aum is in private investments and 10 billion is in the long only fund which leaves 11 billion dollars for the hedge fund. So that's the amount you should be using in your calculations. Even then, chase probably has something like 3-4 billion dollars in the hedge fund. So fee paying assets there are something like 7-8 billion dollars.
Yeah but wouldn't it be wrong to assume that their long only/private stuff didn't also put up those lights out numbers? If i remember correctly, flagship Tiger Global L/S fund was up 48%, and the long only fund was up something like 65%, which makes sense bc of all those unicorn IPOs. Regardless of that, I agree with pincerate that the number is not just $41bn * 48%, it's definitely lower. But we don't need to estimate that number bc Tiger Global reported that they made $10.4bn (that number is on Bloomberg, Institutional Investor, CNBC etc, and it's more than any other fund) for their investors in 2020. So I THINK (someone can check this/give feedback) that means:
$10.4bn * 20% = $2.08bn GP share...Dollarbillstearnofficial got the percentage of Coleman's income from performance fees correct, but we don't really know Shleifer's. So all we know is that it's $2.08bn - Coleman's $1bn = $1.08bn spread across Shleifer and then the remaining Tiger Global partners and analysts. This is where it becomes an estimate and I honestly have no idea, but maybe Shleifer took half of it, i don't know. Half kind of makes sense because Coleman made 1/3 of his income from performance fees, and maybe Shleifer also made 1/3 from performance fees, so ~500. So now it's $508mm spread across Tiger Global partners and analysts. The other thing is that 15 partners and 15 analysts sounds kinda high. There was a techcrunch article in January stating that Tiger Global had 22 investment professionals, which is more believable.
$508mm spread across 22 folks = $23.1mm per person. SO...another big assumption: 11 partners, 11 analysts, can anyone give feedback? Perhaps $375 of that goes to the partners, so ~$34mm per partner, and then maybe the remaining $133mm goes to the analysts, so $12mm per analyst. $12mm per analyst and $34 per partner sounds a lot more realistic for a fund like Tiger Global in a banger year. Now again, it depends on how many partners vs. analysts, how much was allocated to the partners & analysts, and ofc how much Shleifer took from the GP share. I think everything else makes sense and would love to hear feedback.
Now my other question to everyone is, do analysts/partners @ Tiger Global do public and private stuff, or are some designated to private side and others to public? Or is it separated by industry, so SaaS guys do public and private SaaS investing?
You're taking the best hedge fund in the universe, and using that as a proxy for what HF earnings can be?
That's like assessing whether you should play golf in high school, and crunching the numbers on how much Tiger Woods has made in prize money + endorsement deals... and concluding that you can make $1-2bn across your lifetime playing golf.
One of our investors is doing low 7 figures in his late 20s at a L/S fund. He feels 2020 was a lot of luck and he just made ridiculous money off the Bill Hwang blow up but again, said it was lucky. I think he's being modest.
Another one retired in his early 30s but said he got very lucky as he joined a fund that scaled AUM really fast.
How big is the late 20s guy's shop? Also any details on performance, size, final comp for the 30s guy?
Don't know much about the 30s guy. Not very talkative and I don't know him well enough to ask some of those questions.
Low 7 figures isn't that much in the HF business, even in your late 20s. You're certainly doing better than your HF peers, but it's not that crazy of a payday.
Let me ask you a corporate finance/valuation question, much would you pay to own the equity in a hedge fund? How would you value it?
I think we should be fair with people on this site, low 7 figures in your late 20's and early 30's is pretty rare, even in the HF industry. Probably better than calling things "crazy" it would be better to give rough percentages and of course include the universe you are talking about.
At the end of the day that kind of payday is top 1-5% across funds (probably on the lower end) and about 5-10% at "mid/top" funds (and different depending on type of fund, etc).
Double post
Just posted this in another thread, but I see a lot of BS here about comp so I'm reposting it here for you freshman to see. Here are the "steps".
1. Grind your ass off in highschool to get to a target & stop jerking off 8 times a day, grind harder in college, get to a top BB/EB/MF PE group, grind even harder and get looks from top HFs. Zero sex life, work 18 hour days minimum, follow the markets for fun, but try to come off as a chill dude for recruiting/interview purposes
2. Become an analyst at a $7bn+ L/S HF. You know the type, Tiger cubs + top notch non tiger cubs. Tiger Global, Lone Pine, D1, Whale Rock, Eminence, Darsana, Coatue, Viking, Altimeter type shops. This should put you at ~$300-500k base
3. Continue the grind and work the hardest here. If the fund has a monster year, you want to be a hard working analyst who put in the work and contributed to some of the monster year
4. IF you actually perform + fund has sick year + you have been there for 2+ years, you will make $2-3m. Confirmed from many sources, in some cases as high as $5 but that is by no means a proxy for how much you can make working as an analyst at one of these funds. $2-3+m in a really good fund with a phenomenal year is realistic 100%, and you could be 28-29 at this stage. NOW, notice how I said L/S. Credit/distressed guys are stingy as fuck - I know a distressed analyst who put on a trade that made ~200m for the fund (fund was like $7bn AUM), and he only got paid $900k. That's a lot, but it's fair to say he was underpaid and he left for a L/S fund.
5. Stay at this L/S fund for > 5 years, maybe you're like 32-33 now, maybe you joined when you were 26. Keep pushing and contributing to fund outperformance, and as long as the boss is not racist or discriminatory in some way, you will make PM/Partner where you can reasonably expect to make low 7 figures in a year, and higher/8 figures in blockbuster year. Do this for a few years, maybe catch the next tech wave, put your earnings back in the fund, and you could probably be worth $20-30m by the time you're 37-40, if not higher. Then you go off an start your own fund.
Now this is the story for maybe 1-3 people out of 100 in this business. Maybe. Incredibly difficult, requires the right fund at the right time + the right boss, self determination/drive, and you actually have to be good at what you do. It's the dream for many, but it's a lot easier said than done. Finito.
2 points on this I dont agree with. Rest is solid info
1. Most of the guys who are at these funds are very normal. They are not weirdos with no sex life, most of them are very relaxed cool guys. Some funds are basically a frat, ie Melvin for example lol.
2. That base number of 300-500 is way too high for an analyst at these shops unless you have been there for a number of years. Generally base is more like 200 starting and scaling by 50k per year. Obviously all in comp is higher and virtually 100% due to management fees but still an important distinction.
Do either of you have examples of analysts in their late 20s/early 30s making $2-3m+? What kinds of funds did they work at/what were the returns like that year? And yes I have heard Plotkin is a big tequila guy
What distressed fund underpaid that much?
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