Comp across the industry

Although I am aware of the very high ceiling in HF, that is based purely on performance. So how are (top) hedge funds going to respond to the PE and EB raises to base (guaranteed) salary?

Furthermore, I struggle to believe that mid 20 something year olds at funds like Citadel, P72, D1, Coatue, Tiger Cubs etc… are pulling in 600k casually and 1 mill in some cases. Can anyone put some truth to these claims?

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Comments (28)

  • Associate 1 in IB-M&A
Sep 9, 2021 - 7:25pm

No one is pulling in 600k 'casually'. But yes those numbers are real. It's hard to imagine when you compare it to other normal jobs but that's the wrong comp set. Maybe MF PE if you want to compare something (I cringe even saying that). Much easier to understand it when you look at the scale of PnL that some really good analysts are pulling. A tiny cut from that PnL is meaningful as an employee.

  • Associate 2 in PE - LBOs
Sep 9, 2021 - 7:59pm

600k? There are outliers making mid 7 to 8 figures in their mid to late 20s, especially if they started in the industry early (eg 1 year after banking and had a few good years to be in a senior enough role)

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Sep 10, 2021 - 3:56am

This forum inflates numbers a ridiculous amount. Yes, there are people making bank in good years, but you're looking at the far right tail. 

To put it into context, a 20 something analyst starting L/S Eq in London is looking at 80k GBP base + 50% Bonus in a decent year. Scales up with experience and contribution to pnl. 

  • Associate 1 in IB-M&A
Sep 10, 2021 - 7:05am

There was a London PE comp thread and 1st year MF assocs there were pulling GBP 200k+. Doesn't GBP120k post banking for L/S seem low? Or is it one of those situations where you are paying early on for higher expected upside in the future if you're good? 

Sep 10, 2021 - 2:01pm

Yeah, chances are that a first year analyst fresh from IB or even ER (which is more common in London) doesn't add to/might even be a drag on team performance. Comp really scales well once you're embedded in team processes and contribute to $. Not v familiar on the PE side, but IB experience is much more relevant there, and pretty much a plug in for execution stuff after a couple months- so comp is done accordingly.

  • Investment Manager in HF - Other
Sep 10, 2021 - 10:01am

I agree with this, but the framing of the questions also leads to this. This person is asking about the top funds and then asking if $600k is realistic. Well, yes, at the top funds, which are already the top small percent of the industry, it is more common. But the HF industry has many average funds that won't pay anywhere near that. 

Sep 10, 2021 - 10:55am

How about earning a spot in the industry first and then assess do you have what it takes to become a Federer? Then the money should follow. 

Otherwise, futile to ask about unattainable comps. It's value-based profession. 

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  • Research Analyst in HF - Other
Sep 12, 2021 - 3:20am

I definitely think PE firms lean on their juniors a ton, but I think you'd be surprised at how few juniors they actually hire to do all work vs. what you would think from the size of banking analyst/associate class phalanxes. I want to say Apollo Corporate PE in NYC has maybe 6-7 associates tops for each year, and there's 4 years till principal and many cut out halfway, so call it ~20 - 22 tops PE juniors in NYC for a giant ass MF PE arm like Apollos. Crazy...

Anyone who actually works at Apollo can chime in if my math is accurate :)

  • PM in HF - Other
Sep 13, 2021 - 12:15am

Thanks, this makes sense. Guess when bored I sit on here and read too much banking kids threads where someone says "how good is BB/EB" and responds with oh they sent 2 to xyz, 1 to abc, 2 to deft hah. In reality yah the #s prolly way smaller. My take is these firms hire these people with the assumption they will do a certain amount of work and why it is worth it to them. While buyside (more MM world) never really hire someone knowing that person has to do a certain amount of work as it is really hard for a junior to add value right away but instead with the focus they are a smart investment to a long-term asset to the firm. Ofcourse the people targetted could be very skilled and the return starts very fast for the firm and they receive the compensation OP stated could be possible.

Sep 13, 2021 - 8:19pm

I do find it a bit amusing that almost all of the responses are focusing on the top quartile comp element, while admonishing kids for being too focused on top quartile comp at HFs, and no one even attempted to answer the original question.

Personally, I don't think HF comp is going to adjust that much industry wide because of the new comp increase at banks. It's a results based industry, and it recruits people who all think that they will produce. So the funds won't want to pay analysts inflated numbers until they earn them. And, even if IB pays $350k for A2As, all the IB analysts trying to get into HFs think they will be the ones that make +$600k in two years because of their performance. 

Sep 15, 2021 - 2:31pm

Excluding pnl cut / performance based comp stories, which are more idiosyncratic (so more susceptible to outliers) in nature, giving you a few examples of top-of-the-street guaranteed 1st year all in comp I've seen (note different career stages / YOE). Again, these are at top firms, some of these are standard at that particular firm for that particular seat, some are based on competing offers/negotiations.

Top Tiger Cub (after 2y IB/ 2y PE ) -> pushing 1m

Top PE MF (after 2y IB) -> 450k

Top MM HF (after undergrad) -> 400k

Ofc this is just headline, so there are questions around recurring comp/cash comp/ etc.

Sep 15, 2021 - 5:57pm

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