let's say you have a 1bn fund, 150mn from the top dogs and 850mn raised.
30 people work for the fund...a few traders from senior to junior, some analysts, some techies, compliance, back office.
if the fund is up 20% at the end of the year, and the fees are 2 and 20, how does that ~$60mn get divvied up?
do comp schemes vary widely fund to fund?
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Clearly, risk-takers get paid more than non-risk-takers. And barring that, seniority makes a difference.
For your question, it makes a difference how many 'top dogs' there are. Is there just one founder? Two? Also, what type of fund are we talking about? Equity L/S, merger arbitrage and distressed debt funds have many more analysts than a place like Brevan Howard which is run largely as a prop desk.
I would actually be interested in learning about this on a case-by-case basis (broken down by 'type of fund'). The compensation structure of various strategies differs quite a bit from one firm to another. Some firms have compensation boards, whilst others are small enough that the founder will determine all bonuses.
I would also like to see how the compensation varies across different strategies.
Makes me wish I had an Absolute Return/Alpha subscription.
Pay is highly variable firm to firm and person to person within a firm. Its also something that you arent really going to know unless you run the fund....the risk-takers will have set deals so their pay is 100% non-discretionary. The analysts pay is very highly subjective...where I work analyst pay in a good year spans from well into 7 figures all the way down to less then investment banking 1st year analyst pay. At a large fund the topic of pay is not something that is talked about much...its not like analysts in banking where everyone knows everyone else's pay stub...30 employee funds might be different but at the "mega-funds" this topic is basically off-limits even for PM's.
HF levels comp breakdown (Originally Posted: 06/09/2009)
I'm sure many of us are familiar with 2/20 and the annualized league tables of top fund managers making obscene amounts of money. I know there's a somewhat standardized salary (although bonuses are obviously all over the map) for first year people.
My question is, is there a standard composition breakdown between managing partners, pm's and analysts at big funds. I know there's no industry standard, and it obviously depends on returns, but to make an analogy, at law firms partners usually pull in on average about ten times what an senior associate makes. I know most bb's (at least in banking) have a somewhat similiar compensation structure.
I'm sure many of the responses I'm going to get are going to be ridiculing my assertions of uniformity. But I was wondering if anyone had any insight beyond the obvious "it varies greatly"
A pretty typical career progression for l/s HF's is 2 years equity research, maybe 3, then go to buyside. One of my sell-side research friends told me that his 1st year comp for a medium sized fund (1 bn - 5 bn?) is 90K base + a bonus expected to e 100% of base. The majority of his work his idea oriented.
Would you mind expanding on this a little bit?
is idea generation. As in he generates, or aids more senior employees in the development of, ideas on markets to be implemented as trades.
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