Top Hedge Funds: Analyst Compensation

Hey guys, roughly how much can one expect in base pay from a multibillion dollar long/short hedge fund for an analyst coming out of banking? I've searched the threads but many were outdated. Any rough idea of total compensation in a typical year would also be appreciated. Thanks a lot.

Hedge Fund Analyst Pay

Total average compensation for hedge fund analyst's is 152k. The average base being 98k and the average bonus being 54k.

Analyst Compensation at Top Hedge Funds

Let's take a look at compensation for analysts at top hedge funds. We'll be providing information on D.E. Shaw, Citadel, Bridgewater, and A.Q.R. Capital. Each firm is listed in Barron's, Penta Top 100 Hedge Funds and their corresponding rank is below. The hedge funds are ordered by highest 3rd-year compound returns. This helps us understand which hedge funds have been able to consistently generate returns and outperform the competition.
from the article

Our search starts with information provided by three major hedge fund databases: BarclayHedge, Morningstar, and Preqin, which collectively sort through thousands of funds that meet our basic requirements. Each firm is contacted to confirm the accuracy of the data and to gather information about its strategy.
Funds are then ranked by their annualized three-year compound performance.

Assets under management (AUM) for each of these firms exceeds 20 billion. Nonetheless, AUM in the billions does not necessarily distinguish a hedge fund. To illustrate, performance is more important to a hedge funds revenue than a standard asset management firm. This is because the asset managers usually charge fixed fee's so their AUM is more directly related to their future earnings. Conversely, hedge funds must reach certain benchmarks before they can charge any performance fee. In other words, having billions of assets under management is not indicative of the "quality" of a hedge fund. Which is why we included ranking by returns when qualifying these funds.
from the article

Total hedge fund assets under management hit $3 trillion last year for the first time, but that was thanks to higher security prices. Net outflows persisted, and fund liquidations totaled 1,057 the highest level since the financial crisis, according to Hedge Fund Research.

Therefore, the following funds are not only large but also accomplished. For more information on the metrics and the complete report visit Barron's, The Top 100 Hedge Funds

The following firms are not exclusively equity long or short. However, each of these four firms employs one of the two strategies if not both. So what can you expect in compensation from a top hedge fund?

D.E. Shaw Analyst Salary & Bonus

  • 2017 Rank: 18th
  • Strategy: Equity & Equity Linked Strategies
  • AUM: 41.0 billion

Analyst Compensation

  • Average base: 120.0k
  • Average bonus: 120.0k
  • Total average compensation: 240.0k

Citadel Analyst Salary & Bonus

  • 2017 Rank: 30th
  • Strategy: Global Macro
  • AUM: 26.2 billion

Analyst Compensation

  • Average base:137.1k
  • Average bonus: 90.6k
  • Total average compensation: 227.7k

Bridgewater Analyst Salary & Bonus

  • 2017 Rank: 50th
  • Strategy: Global Macro
  • AUM: 160.0 billion

Analyst Compensation

  • Average base: 108.9k
  • Average bonus: 22.0k
  • Total average compensation: 130.9k

A.Q.R. Capital Management Analyst Salary & Bonus

  • 2017 Rank: 53rd
  • Strategy: Multi-Strategy
  • AUM: 175.0 billion

Analyst Compensation

  • Average base: 125.0k
  • Average Bonus: 55.0k
  • Total average compensation: 180.0k

All compensation data is courtesy of the 2018 Wall Street Oasis Hedge Fund Industry Report. Averages are calculated using compensation data from 79 different funds. Bayesian Statistics were used to account for standard deviation in rankings.

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Comments (131)

Jan 6, 2015

It's all highly dependent on the fund and how it's organized. In my experience, you can expect something on the order of $150,000 as your base salary. Again, there's no "hard and fast" rule to abide by, and that number can deviate by tens of thousands of dollars depending on where you end up and how the fund chooses to allocate their base/bonus mix.

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Jan 6, 2015
abacaxi:

It's all highly dependent on the fund and how it's organized. In my experience, you can expect something on the order of $150,000 as your base salary. Again, there's no "hard and fast" rule to abide by, and that number can deviate by tens of thousands of dollars depending on where you end up and how the fund chooses to allocate their base/bonus mix.

I would say base is going to be 100k-150k with all-in comp in the 250k-350k range. 2nd year all-in would be in the 400k-500k range. After that, variability is going to swing widely. If you are a top Tiger fund or one of the really high profile places it is going to be higher, if you are at $2bn fund with ok performance and a 1/15 fee structure it might be less.

The HF analyst space is not as uniform as the post banking megafund PE space but the two are competing for the same pool of candidates. It is a LOOSELY efficient market and pay will be similar.

Jan 11, 2015
Gray Fox:

I would say base is going to be 100k-150k with all-in comp in the 250k-350k range. 2nd year all-in would be in the 400k-500k range. After that, variability is going to swing widely. If you are a top Tiger fund or one of the really high profile places it is going to be higher, if you are at $2bn fund with ok performance and a 1/15 fee structure it might be less.

If this were the case, even people who worked their way up the ladder at banks would be quitting to go be analysts all over again.....I know several people who wound up at hedge funds and the compensation is not nearly as large as you're saying (at least not your first few years).

Jan 11, 2015
jargon223:
Gray Fox:

I would say base is going to be 100k-150k with all-in comp in the 250k-350k range. 2nd year all-in would be in the 400k-500k range. After that, variability is going to swing widely. If you are a top Tiger fund or one of the really high profile places it is going to be higher, if you are at $2bn fund with ok performance and a 1/15 fee structure it might be less.

If this were the case, even people who worked their way up the ladder at banks would be quitting to go be analysts all over again.....I know several people who wound up at hedge funds and the compensation is not nearly as large as you're saying (at least not your first few years).

Don't think grayfox's numbers are necessarily right for the average fund, but I know people at various top funds for whom those ranges are spot on (year 1-2). Not sure about further out but I think 1mm and up is possible in a blowout year.

Jan 11, 2015
troubadour:

Don't think grayfox's numbers are necessarily right for the average fund, but I know people at various top funds for whom those ranges are spot on (year 1-2). Not sure about further out but I think 1mm and up is possible in a blowout year.

Ok. Please do elaborate on which funds you're talking about. Let's break this down for a second...

Analysts making half a mil. Ok next guys up must be making a mil - god forbid you hit a management role, now you're making top CEO salaries...

These numbers are off. Period.

But whatever, I'm done playing bullshit patrol - there'll be 50 other threads with bs numbers in them by the time I've posted this message.

Jan 11, 2015
jargon223:
troubadour:

Don't think grayfox's numbers are necessarily right for the average fund, but I know people at various top funds for whom those ranges are spot on (year 1-2). Not sure about further out but I think 1mm and up is possible in a blowout year.

Ok. Please do elaborate on which funds you're talking about. Let's break this down for a second...

Analysts making half a mil. Ok next guys up must be making a mil - god forbid you hit a management role, now you're making top CEO salaries...

These numbers are off. Period.

But whatever, I'm done playing bullshit patrol - there'll be 50 other threads with bs numbers in them by the time I've posted this message.

Either (i) you're mixing up "analyst" as a title with "analyst" as a job role / function, or (ii) you and your friends work at unpreftigious funds

Entry level analysts at my fund (usually after 2 yrs of banking pre-MBA) are making $300k+ all-in

Jan 11, 2015
jargon223:
troubadour:

Don't think grayfox's numbers are necessarily right for the average fund, but I know people at various top funds for whom those ranges are spot on (year 1-2). Not sure about further out but I think 1mm and up is possible in a blowout year.

Ok. Please do elaborate on which funds you're talking about. Let's break this down for a second...

Analysts making half a mil. Ok next guys up must be making a mil - god forbid you hit a management role, now you're making top CEO salaries...

These numbers are off. Period.

But whatever, I'm done playing bullshit patrol - there'll be 50 other threads with bs numbers in them by the time I've posted this message.

You mad? Granted only a handful of funds pay this kind of comp but if you are part of the well recruited pool of HF candidates this is the expectation. I've seen numbers go as high as $600K for first year analyst post banking.

Jan 11, 2015
jargon223:
Gray Fox:

I would say base is going to be 100k-150k with all-in comp in the 250k-350k range. 2nd year all-in would be in the 400k-500k range. After that, variability is going to swing widely. If you are a top Tiger fund or one of the really high profile places it is going to be higher, if you are at $2bn fund with ok performance and a 1/15 fee structure it might be less.

If this were the case, even people who worked their way up the ladder at banks would be quitting to go be analysts all over again.....I know several people who wound up at hedge funds and the compensation is not nearly as large as you're saying (at least not your first few years).

I always find it interesting how different the numbers are in threads like this compared to the WSO Compensation report. The numbers Gray Fox gives are similar to the "consensus" every time a question like this gets asked, yet the 2014 WSO report shows numbers less than half that. 2014 Analyst/Senior Analyst/Associate pay ranges from $100k-$163k all-in on average. Titles at funds can vary a lot so I think it is safe to lump those 3 together but even at the VP level it shows all-in comp averaging $244k. I'm guessing in NYC the average is probably somewhere in between.

Jan 8, 2015

I think that's spot on. My first year stub was 120 base, 330 all-in prorated. Then second year (first full year) was same base, 400 all-in.

Jan 9, 2015

400 all-in for second year seems a little high. How much AUM does your fund have?

Jan 9, 2015
oaktree capital:

400 all-in for second year seems a little high. How much AUM does your fund have?

I was thinking the same thing.

Jan 9, 2015

what about for straight out of college?

Pennies from JcPenny

Jan 9, 2015
jcpenny:

what about for straight out of college?

Straight out of college is pretty rare and you will probably be paid similar to a banking analyst the same year. Again, very few funds hire people right out of undergrad

Jan 9, 2015

aaaaaand let the fapping begin.

Jan 9, 2015

Just goggled what flapping means... priceless

Jan 9, 2015

Good thing you had your goggles on...

"I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant."

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Jan 9, 2015

Gray Fox is correct. I mostly see/hear $60-80k base for kids straight out of school. This seems right to me, as you are most likely dead weight for the first year+ anyway.

More of a learning experience; wouldnt worry about the comp

Jan 9, 2015

Yes, the information from @"Gray Fox" and @"Cries" sounds about right to me. Obviously this can vary - especially for the most elite HF and top Ivy grads. After the first 1-2 years comp will likely increase exponentially, assuming that both the individual and fund are performing at a decent level.

Jan 10, 2015

But can someone put a range on out of college pay at a MF with historically great performance?

Pennies from JcPenny

Jan 10, 2015
jcpenny:

But can someone put a range on out of college pay at a MF with historically great performance?

Is there any MF with historically great performance? Unless by historically, you mean 20 years ago.

Jan 11, 2015
mrb87:
jcpenny:

But can someone put a range on out of college pay at a MF with historically great performance?

Is there any MF with historically great performance? Unless by historically, you mean 20 years ago.

SEQUX...

patternfinder:

Of course, I would just buy in scales.

See my WSO Blog | my AMA

Jan 11, 2015
Simple As...:
mrb87:
jcpenny:

But can someone put a range on out of college pay at a MF with historically great performance?

Is there any MF with historically great performance? Unless by historically, you mean 20 years ago.

SEQUX...

Sorry, I made the classic mistake of thinking MF=PE (obviously not the context here). I have little respect for PE megafunds. Mad respect for Ruane, Cunniff and Goldfarb.

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Jan 11, 2015

The figures GrayFox has provided are consistent with what I've seen.

patternfinder:

Of course, I would just buy in scales.

See my WSO Blog | my AMA

Jan 11, 2015

I think Gray Fox is inline with his first year average (250-350 all in) but I think the second year all in number is closer to ~325-425. This is obviously an average so there's going to be people above and below and I've personally seen / know some 1st or 2nd year kids who have made 500k+ but that's not the norm; at least not in my opinion...which may be worth nothing..

Jan 11, 2015

God dammit, so it seems like I'll be in limbo about pay for the next year and a half. Then the cash flows starts to rollz.

Pennies from JcPenny

Jan 11, 2015

It was probably a mistake to put reasonable numbers up rather than go with the standard response of "Hedge Fund comp is highly variable" I wanted to offer a legitimate data point for funds that have large, stable capital bases and routinely recruit analysts.

-There are always going to be outliers to the upside. If you worked at Adage in 2014 or Appaloosa in 2009 (or any year really) the numbers are going to be off the charts laughable.

-At small funds the numbers are going to be in line with the WSO compensation report. 90%+ of launches in the last 5 years do not start at 2/20. Its more like 1-1.5% with a hurdle, high water mark, and 15-20% incentive fee. At $300mm if a fund has a decent size staff the founders are not making much at all on the management fees. Unless there is an incentive fee bonanza they are not going to pay a 25-28 year old a boatload of cash.

-After year 2-3 post banking there is going to be so much variability at an individual level that even if you narrowly defined the universe of funds (L/S GARPy funds based in the US with a lean staff and $5bn-$15bn AUM) that there is no point in putting up numbers. At that point the performers are going to have a lot of upside and those that aren't really performing will probably be flat on comp or counseled to find something other to do than pick stocks/credits for a living. Maybe @"BlackHat", @"Mr. Pink Money", @"NewGuy" or others could chime in.

-I have no idea what the market is like for people coming out of MBA programs. Very few people that do banking and go to good funds go on to business school. The ones that do and have favorable work references probably get great offers.

Jan 12, 2015
Gray Fox:

-I have no idea what the market is like for people coming out of MBA programs. Very few people that do banking and go to good funds go on to business school. The ones that do and have favorable work references probably get great offers.

I can't speak to all-in comp yet but most of the offers coming out of MBA programs range from $150k-$175k base (I've heard $100k on the low end and $200k on the high end from classmates). There doesn't appear to be much difference between post MBA analysts at a fund vs post banking analysts unless you worked on the buyside prior to business school. My expectation is all-in is probably ~$300k for first year out of school just looking at the base salary of the offers I've seen.

Jan 12, 2015
MilitaryToFinance:
Gray Fox:

-I have no idea what the market is like for people coming out of MBA programs. Very few people that do banking and go to good funds go on to business school. The ones that do and have favorable work references probably get great offers.

I can't speak to all-in comp yet but most of the offers coming out of MBA programs range from $150k-$175k base (I've heard $100k on the low end and $200k on the high end from classmates). There doesn't appear to be much difference between post MBA analysts at a fund vs post banking analysts unless you worked on the buyside prior to business school. My expectation is all-in is probably ~$300k for first year out of school just looking at the base salary of the offers I've seen.

When I came out of b-school a few years ago wasn't the greatest market environment, but bases were 125k-150k range at hedge funds (obviously some outliers which always get way too much attention.) I tried to keep track for first 2 years of base/bonus progression from ~10 analysts (varying geographies, strategies, AUM, etc). And people were generally getting 300k-350k-ish all-in after a couple years, and then there were a few positive outliers. I stopped keeping track because it all gets totally PNL/perf driven pretty quickly. I'm sure the ranges could've been higher if the list were exclusively name brand or large equity AUM funds in NYC.

Jan 17, 2015
IBPEHFVC:
MilitaryToFinance:
Gray Fox:

-I have no idea what the market is like for people coming out of MBA programs. Very few people that do banking and go to good funds go on to business school. The ones that do and have favorable work references probably get great offers.

I can't speak to all-in comp yet but most of the offers coming out of MBA programs range from $150k-$175k base (I've heard $100k on the low end and $200k on the high end from classmates). There doesn't appear to be much difference between post MBA analysts at a fund vs post banking analysts unless you worked on the buyside prior to business school. My expectation is all-in is probably ~$300k for first year out of school just looking at the base salary of the offers I've seen.

When I came out of b-school a few years ago wasn't the greatest market environment, but bases were 125k-150k range at hedge funds (obviously some outliers which always get way too much attention.) I tried to keep track for first 2 years of base/bonus progression from ~10 analysts (varying geographies, strategies, AUM, etc). And people were generally getting 300k-350k-ish all-in after a couple years, and then there were a few positive outliers. I stopped keeping track because it all gets totally PNL/perf driven pretty quickly. I'm sure the ranges could've been higher if the list were exclusively name brand or large equity AUM funds in NYC.

GrayFox's numbers are probably correct but the last few years have been pretty good with more positive than negative surprises at bonus time. Your numbers are probably closer to "fair", but regardless good funds will comp in line or higher than megafund PE.

Actually sort of interested to know what sort of offers bschool people with 2+ years of long/short are getting today (vs. people who went to wait out 2008/2009) and what the general perception of talent quality is.

Jan 17, 2015
IBPEHFVC:
MilitaryToFinance:
Gray Fox:

-I have no idea what the market is like for people coming out of MBA programs. Very few people that do banking and go to good funds go on to business school. The ones that do and have favorable work references probably get great offers.

I can't speak to all-in comp yet but most of the offers coming out of MBA programs range from $150k-$175k base (I've heard $100k on the low end and $200k on the high end from classmates). There doesn't appear to be much difference between post MBA analysts at a fund vs post banking analysts unless you worked on the buyside prior to business school. My expectation is all-in is probably ~$300k for first year out of school just looking at the base salary of the offers I've seen.

When I came out of b-school a few years ago wasn't the greatest market environment, but bases were 125k-150k range at hedge funds (obviously some outliers which always get way too much attention.) I tried to keep track for first 2 years of base/bonus progression from ~10 analysts (varying geographies, strategies, AUM, etc). And people were generally getting 300k-350k-ish all-in after a couple years, and then there were a few positive outliers. I stopped keeping track because it all gets totally PNL/perf driven pretty quickly. I'm sure the ranges could've been higher if the list were exclusively name brand or large equity AUM funds in NYC.

GrayFox's numbers are probably correct but the last few years have been pretty good with more positive than negative surprises at bonus time. Your numbers are probably closer to "fair", but regardless good funds will comp in line or higher than megafund PE.

Actually sort of interested to know what sort of offers bschool people with 2+ years of long/short are getting today (vs. people who went to wait out 2008/2009) and what the general perception of talent quality is.

Jan 17, 2015
IBPEHFVC:
MilitaryToFinance:
Gray Fox:

-I have no idea what the market is like for people coming out of MBA programs. Very few people that do banking and go to good funds go on to business school. The ones that do and have favorable work references probably get great offers.

I can't speak to all-in comp yet but most of the offers coming out of MBA programs range from $150k-$175k base (I've heard $100k on the low end and $200k on the high end from classmates). There doesn't appear to be much difference between post MBA analysts at a fund vs post banking analysts unless you worked on the buyside prior to business school. My expectation is all-in is probably ~$300k for first year out of school just looking at the base salary of the offers I've seen.

When I came out of b-school a few years ago wasn't the greatest market environment, but bases were 125k-150k range at hedge funds (obviously some outliers which always get way too much attention.) I tried to keep track for first 2 years of base/bonus progression from ~10 analysts (varying geographies, strategies, AUM, etc). And people were generally getting 300k-350k-ish all-in after a couple years, and then there were a few positive outliers. I stopped keeping track because it all gets totally PNL/perf driven pretty quickly. I'm sure the ranges could've been higher if the list were exclusively name brand or large equity AUM funds in NYC.

GrayFox's numbers are probably correct but the last few years have been pretty good with more positive than negative surprises at bonus time. Your numbers are probably closer to "fair", but regardless good funds will comp in line or higher than megafund PE.

Actually sort of interested to know what sort of offers bschool people with 2+ years of long/short are getting today (vs. people who went to wait out 2008/2009) and what the general perception of talent quality is.

Jan 22, 2015

How do these numbers compare to junior analysts at HY credit funds?

Jan 23, 2015

What do analysts beginning at the megafunds like Viking make all-in?

Jan 23, 2015
OrangeBanana:

What do analysts beginning at the megafunds like Viking make all-in?

If you have to ask...

Jan 23, 2015

Sorry got the message from above posts. Heard anywhere from 500K to 1m but I guess it really depends on the fund and individual's performance

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Jan 24, 2015
OrangeBanana:

Sorry got the message from above posts. Heard anywhere from 500K to 1m but I guess it really depends on the fund and individual's performance

Somebody lied to you. No entry level analyst is making $500k-$1M.

Jan 25, 2015
MilitaryToFinance:
OrangeBanana:

Sorry got the message from above posts. Heard anywhere from 500K to 1m but I guess it really depends on the fund and individual's performance

Somebody lied to you. No entry level analyst is making $500k-$1M.

If he's talking someone who has spent several years at a large fund post-IB and performed well, then it's a reasonable range. For 1st year analyst post-IB at a "top" fund, somewhere in the $300-400K range should be expected. Eton Park, etc. But not many of those jobs to go around.

Jan 23, 2015

I would also like to add that if you start off at a hedge fund with little no no PnL risk, your bonus will likely be a multiple of your base, anywhere from 0-1.5x depending of how good of a year you have.

Disclaimer for the Kids: Any forward-looking statements are solely for informational purposes and cannot be taken as investment advice. Consult your moms before deciding where to invest.

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Jan 25, 2015

SumZero just released a good report on hedge fund comp data they collected: https://sumzero.com/sp/2015_SZCompReport

It's much more rare than people think to make $500k+ at somebody else's hedge fund. The number of guys making $1m or more with an analyst title is exceedingly slim. A non-founding analyst who achieves a "partner" title at a top L/S equity fund is unlikely to make more than $2m in a normal year (excluding compounding on their own investment). Frankly your value to the founder of the fund is determined by your replacement cost, and you can get a whole lot of smart people to competently research trades for you for much less than $2m. Also if you do manage to build an alts business with some real AUM, it's a bit of a land grab to see how much personal wealth you can accrue as fast as possible, as the morbidity of even established hedge funds is so high.

There are of course exceptions and pre-crisis this wasn't so much the case. But yea... there is really no free lunch. You wanna make $500k - $1m reliably for your whole career, go become a surgeon

Jan 26, 2015

Thank you for adding some substance to this conversation @RLC1 - this is very useful.

Jan 27, 2015

I'm a little confused here. Let me know where I'm off base, and I'm generally referring to top tier hedge funds... the ones you would go to if you're on a a top tier BB to a top tier PE to HF track.

The titles I'm refering to are defined as follows: PM, Senior Analyst, and Analyst. Founder PM is exactly what it sounds like. PM is a partner level guy who runs his own book. Senior analyst is an analyst who has shown promise and hasn't gotten churned out after his first few years there. And lastly....

An Analyst seat is not entry level, but a post-top tier PE seat. Again I know they vary to a large degree, but just wanting to be clear of what I mean when I use these titles.

As an Analyst, the post-PE comp is in the range of $400-600k. I don't understand he "exceedingly rare to make over $500k" comment. MF Comp for a second year associate is something in the ballpark of $350-450k. If you had a 3rd year associate offer on the table, that comp package would be in the $400-500k range -- this is what you would weigh a HF offer against on an apples-to-apples basis. I've always heard that HF gigs are even more attractive than a partner track PE gig. But that notion is not at all consistent with your $500k+ is rare comment.

My understanding has been that after your PE stint, if you make it to an elite HF, you can expect to make somewhere between $400-600k (that is a broad range, even though it may not seem like it). Within a year or two, you should be generating ideas and may be putting some money on a few of them under the sponsorship of a PM, or at the very least, in addition to your regular responsibilities you're also running a mock book before you're given P&L. After a few years of this, if you're good enough and have proven a reason for you to exist, you haven't burned out, the markets haven't gone to shit, your fund hasn't blown up, and there is organizational room for you, you'll graduate to a Senior Analyst position where you'll generally be making somewhere between $600k-1.5m. Again, if I comp this against where you'd be in PE had you stayed, you'd be approximately at the Principal level and would be making close to if not more than $1m. I'm sure you noticed all the IFs, this suggests to me that you should make more at a HF given the higher degree of uncertainty versus a role of the same tenure at a PE firm, and so my comps numbers seem directionally accurate.

What I've always heard (and to some degree seen) is HF > PE > IB and the best bankers can graduate to PE and the best PE guys can graduate to a HF. So its hard to believe that a above average banker would make about the same as a HF partner (i.e., ~$2m per year). Also, the jump in level of intelligence from Banking to PE is astronomical, in my opinion. Banking is idiots abound, PE is the complete opposite. To think that a $2m/year banker and a PE or HF partner are interchangeable is definitely not true IMO. To say a PE Partner and a HF Partner are interchangable, I don't really have the experience to know, but I'd speculate it is a slight difference. And like anyone performing at an elite level, when someone is a tenth of a second faster on a lap, its a marginally insurmountable difference. That combined with the higher volatility in HF, would suggest that MF PE partner -- who's making somewhere in the range of $3-5m per year -- is (a) not as smart and (b) would demand more money given the higher volaility at a HF. For either and both of these reasons, I have to believe a non-founder HF Partner is making at least $3-5m per year. I'd venture to say that they're making substantially more than that, but averaged in with down years, it ends up being more over the long run but not by a very large multiple.

Back to the junior level, I have a relatively small sample size, but the few friends I know at HFs have gone to top tier shops after their PE stint and the low end was a baseline targeted $350k all-in comp package at a few billion AUM fund varying to a $500-800k range at a Tiger Cub.

Anyway, those are my few datapoints / triangulations that make $500k as being aspirational and $2m as being a ceiling in the HF world seem like very low expectations. And again, I'll caveat with the fact that my PE reference is the megafunds and hedgefund references are where a megafunder would seek to go (an elite HF).

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Jan 27, 2015
Colonel_Sanders:

I don't understand he "exceedingly rare to make over $500k" comment.

Colonel_Sanders:

My understanding has been that after your PE stint,if you make it to an elite HF, you can expect to make somewhere between $400-600k

Bold added for emphasis.

No further comment.

Jan 27, 2015

Thanks, this is helpful. Sent you a message.

Jan 27, 2015

The gap between my performance and low-comp is absurd. I am getting out of here so fast...

Thanks internet!

Follow me on Twitter: https://twitter.com/KarateBoy

Jan 27, 2015

The gap between my performance and low-comp is absurd. I am getting out of here so fast...

Thanks internet!

Follow me on Twitter: https://twitter.com/KarateBoy

Jan 27, 2015

^
Way too many generalizations. Read about multimanager vs. 1 PM model.

Hard to guarantee step up salary from megafund PE.

Most take a hit.

You add 0 value a HF vs. someone who went analyst > HF. HFs don't give a crap what you did before and they know you are screwed because a 2nd year megafund PE is not getting promoted internally and his only option is lateraling down to a mid size PE firm or going to bschool.

No one is thinking "oh crap let me throw money at this PE dude 'cause his 2 years is up!" If anything it's "hey ur 2 years are up, convince me why I don't just take this hungrier and younger 1 year GS/MS/BX IBD analyst instead?" Most HFs take IBD analysts for this reason. Less bad habits to unlearn and kids are hungrier on average.

Your ranges are possible but way too narrow. Try $200k to $600k range as an analyst. Tiger model is all about mentor/mentee and being in the ship together. If you don't clear fees, you won't get much.

Jan 27, 2015

Your caveat pretty much answers your question... You are basically saying, "if we take only the top guys from the top schools who were also top in their banking program and then top in their PE program and move to a top hedge fund, then making $500k as an analyst isn't exceedingly rare." And then you're saying "if we take the guys in a seat at a top fund that kick ass for a few years, it's not uncommon to see comp in the $600k - $1.5 million range at the senior analyst level."

I agree with those statements. But you're talking about, I don't know, 0.5% of people who enter the hedge fund industry? Maybe less? The Harvard -> GS TMT -> Apollo -> Third Point et al -> Career advancement at Third Point et al is very far from the typical path. If that's you, great; you can go kick ass at Omega or Greenlight or wherever, top out at 2 bucks on an average year, quit, and launch Colonel's Capital with a $250m seed.

The rest of this I just don't have the time to reply to right now.

Jan 27, 2015

So you're saying that at Greenlight/Viking/Omega etc. you plateau at $2 million a year? What's your basis for that claim?

Jan 27, 2015
Colonel_Sanders:

So you're saying that at Greenlight/Viking/Omega etc. you plateau at $2 million a year? What's your basis for that claim?

I think you are overly worried about comp for a position that most are unlikely to ever reach.

There is absolutely no hard cap on how much you can make in a year. From what I have seen typical comp structure if you are a PM managing $X is a fairly modest salary and a percentage of incentive fees. I'm sure that percentage can vary quite a bit depending on how indispensable you are/become and obviously comp then depends heavily on your performance and assets in your book. Whether or not your fund has this exact structure and the degree to which non-founders are compensated will obviously depend on the fund. There is only one Seth Klarman at Baupost but that degree of concentration in managing the portfolio could be different elsewhere.

Jan 28, 2015
mk1275:

I think you are overly worried about comp for a position that most are unlikely to ever reach.

Why would I worry about whats applicable to most people? I'm worried about what's applicable to my specific situation.

@"RLC1" It definitely helps to know what you're basing your info on, so thanks for that added color. I am quite surprised though. Given those stats, it strikes me that if its between staying in MF PE or going to an Elite HF, MF PE is a no brainer.

Jan 28, 2015

^ HF compensation is more volatile than PE, but it's faster paced and people tend to enjoy their jobs and show real passion in fleshing out investment ideas.

There's plenty of HF analysts who make 500k and more, however most do not. But who cares, why don't you decide what you're passionate about and do that?

I'd rather make 300k and work 20 hours less a week and doing what I love than make 500k and write shit like this:

"I also hate my fucking job and everything about it. There are a total of 0 fucks given deep in the recesses of my office at [insert firm name here]. But I deeply want to excel and be the best at what I do, but I just can't seem to get myself to do anything. Maybe I'll go to a hedge fund, maybe I'll stay in PE, launch a start-up... maybe I'll go to b-school and defer that decision. I have no idea whether I'll get into b-school... but maybe it will be some reprieve from my current dismal existence. I can make some new friends and travel and probably continue to drink too much alcohol and caffeine.

I've been hyper-motivated my entire life, but for some reason for the last year or so I can't seem to want to do anything. I can't exactly tell whether I (a) hate my job; (b) hate the people I work with; (c) am just in a weird funk. And so its very challenging to figure out exactly what it is I need to change to not be so sub-optimal.

In addition to a drunk, a degenerate and a womanizer, I'm also a spendthrift. I've made a lot of money, and I have $1,200 in my bank account. I have no savings. And I borrowed ~$20k out of my $40k 401k last year to help a family member and fund a vacation. I own a $2,800 suit, a $1,000 pair of shoes, and numerous other things that I can fiscally afford but practically cannot. I went through a phase last year where I'd go to Delmonicos or Smith & Wollenski by myself and have a steak dinner and a bottle of wine."

http://www.wallstreetoasis.com/forums/ama-im-at-th...

Jan 28, 2015

I don't remember asking for advice on what you think I should do with my career.

I'd also be surprised if other junior people at either a bank, PE firm or HF feel markedly different than the 2 paragraphs of the above when they're at an abysmal low point. The only difference is that some are honest enough with themselves to own up (and sometimes publicly volunteer the sentiment) while others wax poetic about all the things they'd rather do than hate their job when it sucks.

Jan 27, 2015

My basis for that claim is multiple personal relationships with people currently/formerly in those kinds of seats at single manager funds. Obviously there is no rule that says you are limited to annual COLA after $2m, but that seems to be the high end of the comp range these days for guys with partner titles who are really just tenured analysts at big/"elite" single manager L/S equity funds. You can feel free to disregard this if you so please; after all, I am ultimately an anonymous person on the internet, working with imperfect information myself.

If you choose not to disregard, I would simply reiterate that your value to an alts firm is dictated by your replacement cost. There's just not a lot you can do as a journeyman equity analyst to make yourself worth 4x a guy who does the same thing as you but is a little bit younger. $2M is a tremendous amount of money for performing a commoditized service like stock research without taking any entrepreneurial risk btw... CEOs tend not to make that much reliably until they're running $50m+ EBITDA companies, and it's a heck of a lot harder to do that than it is to buy cheap stocks. There's a reason senior analysts leave these firms all the time to take a run at their-own-name capital management with a sub-$100m launch.

The broader point I was making above is that if you destratisfy the market from the top 1% of hedge funds to work for, you are left with an industry of pretty smart people who are earning on average way, way, way, way less than people on this board (and elsewhere in society) seem to think.

    • 1
Jan 27, 2015
RLC1:

My basis for that claim is multiple personal relationships with people currently/formerly in those kinds of seats at single manager funds. Obviously there is no rule that says you are limited to annual COLA after $2m, but that seems to be the high end of the comp range these days for guys with partner titles who are really just tenured analysts at big/"elite" single manager L/S equity funds. You can feel free to disregard this if you so please; after all, I am ultimately an anonymous person on the internet, working with imperfect information myself.

If you choose not to disregard, I would simply reiterate that your value to an alts firm is dictated by your replacement cost. There's just not a lot you can do as a journeyman equity analyst to make yourself worth 4x a guy who does the same thing as you but is a little bit younger. $2M is a tremendous amount of money for performing a commoditized service like stock research without taking any entrepreneurial risk btw... CEOs tend not to make that much reliably until they're running $50m+ EBITDA companies, and it's a heck of a lot harder to do that than it is to buy cheap stocks. There's a reason senior analysts leave these firms all the time to take a run at their-own-name capital management with a sub-$100m launch.

The broader point I was making above is that if you destratisfy the market from the top 1% of hedge funds to work for, you are left with an industry of pretty smart people who are earning on average way, way, way, way less than people on this board (and elsewhere in society) seem to think.

One exception though is multi-manager funds. There are regular promotions for all-star analysts to PM at these funds, and once you are a PM you typically are on a contract of a percentage of pnl. It gets pretty easy for these guys to make money if they're good because if you are only managing a $300MM pod (which is not a crazy size though you have to build to it) and can generate 30-40mm of pnl, you can typically get between 10-25% of this (depending on the fund, usually it's 10-15%), so 3-6mm is doable. big portolios at these funds can run into the bn's, and the senior PMs here can make in the 8 figures

    • 1
Jan 27, 2015

>15% PnL is nuts. Most hedge funds only charge a 15-20% performance fee. I've seen tranched fee structures depending on returns with a top tranche 15%. I've also seen a flat 7% PnL.

Only prop shops or Citadel can offer a 20+% PnL contract.

Pennies from JcPenny

Jan 28, 2015
jcpenny:

>15% PnL is nuts. Most hedge funds only charge a 15-20% performance fee. I've seen tranched fee structures depending on returns with a top tranche 15%. I've also seen a flat 7% PnL.

Only prop shops or Citadel can offer a 20+% PnL contract.

there are a couple funds that offer 20%+ pnl contracts, Citadel is one of them. so does millennium, and so does SAC. there are others, but these 3 are very big places (given their leveraged portfolios). As I said, usually it's 10-15%.

Jan 27, 2015

Worth noting there are ~7,000+ hedge funds in the U.S. The $300-400 range I threw out earlier in regards to 1st year comp (post-IB) seems in my experience to be applicable to most of the "elite" HFs [admittedly, based on a low sample size]. But these funds are very much the "1%" of the hedge fund world in terms of the magnitude and steadiness of fees, and thus the magnitude and steadiness of comp at the junior level. There are very few of these positions to go around even in comparison to MF PE. HFs, with rare exception, do not churn post-IB analysts in the way that private equity firms do. This means there are fewer positions but good performance brings the possibility of quicker advancement without going to b-school.

Jan 27, 2015

my general impression is that while the numbers being quoted aren't crazy, they're probably a bit high (in terms of progression and also in terms of variability), and also tend to ignore the fact that analysts get blown out all the time and then end up making substantially less at their next fund. at least a few tiger cubs I know of have analyst programs that are well paid but then the vast majority of analysts are asked to leave after 2-3 years BC it's like a pre-mba program.

it's very tough to get to the 2mm plus level in HFs because there just aren't that many of those seats to go around. for example, if you are a sector head at a big long short fund, can you make that much or more? sure. but there's only one sector head per sector...all the other analysts work for him/her, and they're not all making that much money (because most of the ideas and risk management is originating out of the sector head, so they are the ones who get the lion's share of the comp that doesn't go to the PM).

Jan 28, 2015

To corroborate the analyst to PM promote that does happen at multimanager funds with relative frequency:

http://www.bloomberg.com/news/articles/2015-01-27/...

"Roughly three fourths of our portfolio managers are now homegrown and in the past year, alone, eight analysts have been promoted to portfolio manager, with others in the pipeline."

Jan 28, 2015

There could very well only be 8 PMs at the artist formerly known as SAC. In which case they have 2 homegrown PMs, great.

Next, I think the more appropriate stat would be Homegrown PMs divided by total Non-PMs hired from the time the first home grown PM was hired into whatever role it was when he entered SAC. The stat they give is misleading and probably intentionally so.

Jan 28, 2015
Colonel_Sanders:

There could very well only be 8 PMs at the artist formerly known as SAC. In which case they have 2 homegrown PMs, great.

Next, I think the more appropriate stat would be Homegrown PMs divided by total Non-PMs hired from the time the first home grown PM was hired into whatever role it was when he entered SAC. The stat they give is misleading and probably intentionally so.

Um...sorry to burst your bubble, but:

http://www.marketwatch.com/story/steven-cohens-poi...

SAC is still killing it. 9bn in AUM and 3bn in trading profits...that means this year they are probably starting around 10-11bn in capital.

And if your point is that most analysts do not get promoted to PM internally...no shit. I don't think anybody is claiming that they do. Only the potential all-stars get that nod. But at SAC there are definitely a lot of internally promoted PMs.

Jan 28, 2015
xqtrack:
Colonel_Sanders:

There could very well only be 8 PMs at the artist formerly known as SAC. In which case they have 2 homegrown PMs, great.

Next, I think the more appropriate stat would be Homegrown PMs divided by total Non-PMs hired from the time the first home grown PM was hired into whatever role it was when he entered SAC. The stat they give is misleading and probably intentionally so.

Um...sorry to burst your bubble, but:

http://www.marketwatch.com/story/steven-cohens-poi...

SAC is still killing it. 9bn in AUM and 3bn in trading profits...that means this year they are probably starting around 10-11bn in capital.

And if your point is that most analysts do not get promoted to PM internally...no shit. I don't think anybody is claiming that they do. Only the potential all-stars get that nod. But at SAC there are definitely a lot of internally promoted PMs.

At peak AUM I think they had around 80 portfolio managers. My guess is on the 11bn they still have 50+.

Related to the original topic of the thread, Point72 publicly guaranteed their analysts at least 300k in total compensation to help stem attrition.

Feb 3, 2015

Excellent job disproving a statement I never made.

I didn't say anything about SAC's performance. I said the stat about "a quarter" of current PMs being homegrown could very well be completely meaningless if they have a 1-2 handful PMs. Which given the usual scaling of HFs, is most likely the case.

Feb 3, 2015
Colonel_Sanders:

Excellent job disproving a statement I never made.

I didn't say anything about SAC's performance. I said the stat about "a quarter" of current PMs being homegrown could very well be completely meaningless if they have a 1-2 handful PMs. Which given the usual scaling of HFs, is most likely the case.

Um, actually, you said that a more meaningful stat would be PMs divided by non-PMs hired at the same time.

To which I said, no shit --> nobody is saying a lot of people get made PM.

And by the way, tell me when you find the 11bn multi-strat hedge fund with 8 portfolio managers.

Tomato, tomaaaaahhhhhtooooooo

Feb 4, 2015

SAC is multistrat, $14 billion aum, and roughly 75 PMs according to their recruiters.

Pennies from JcPenny

Feb 2, 2015

double post

  •  Feb 4, 2015

not much probably.. although it definately helps.

Feb 1, 2015

posted twice by accident

Feb 4, 2015

100k+bonus based on the performance of the strategy. bonus will be determined by the portfolio manager.

    • 1
Feb 4, 2015

agreed

Feb 4, 2015

agreed

    • 1
Feb 4, 2015

I thought bonus was determined based on P&L

Feb 4, 2015

what others said.

Feb 4, 2015

I've heard of lower ($80K) plus bonus at large, well-repected funds

Feb 4, 2015

agreed

Feb 4, 2015

I've heard of higher - $125K + bonus, depending on your P&L.

Feb 4, 2015

My cousin works at a currency trading hedge fund in NY, right now he's 3 years out of UG at Wharton.

Base pay is 80 K
He gets a semi-annual bonus which regularly tops 100 K.
Last year, all in was about $400 K.

Feb 4, 2015

According to your post that would be 280k, not 400k.

Feb 4, 2015

at a minimum thats 280K, but he probably gets 150-200K semi-annually when the the fund is up and he has been responsible for some of the profits. This isn't banking where bonuses are within a 5% band

Feb 4, 2015

Ah, i read that his "bonus tops out at 100k." My mistake.

Feb 4, 2015

what would be the compensation range for first year analysts/associates/

Feb 3, 2015

first year numbers sound about right (250kish) but it is way harder to get into the 7 figures without running risk then seems to be consensus here (at least at a multi-manager). A star late-20s analyst may make 500k+ but these are "up or out" jobs...in five years either they will be making huge money as a successful PM, they will be elsewhere (often not in the hedge fund industry due to burnout or inability to get another job), or they will be making about the same as they were five years ago as an analyst. Generally "career analysts" never make it anywhere near the 2MM level unless they are running the whole research department or were an early partner.

Feb 4, 2015

I have one friend that just left a top BB after 1 year as an analyst and joined a top HF with 125k base and bonus very largely dependent on the performance of his investment ideas. So if he's good (and he is), he'll likely be laughing.

Feb 4, 2015

has PS75 base, and likely the same again in bonus in his first yr.

Feb 3, 2015

SAC is a very special situation due to their recent upheaval. They currently offer way above-market pay-outs for PMs and likely are quicker to promote from within simply because they are "rebuilding their roster". Generally, at large multi-managers Analyst to PM promotes are very hard to come by although they have gotten slightly more common in recent years simply because the sell-side no lonmger is creating traders with real track records of risk taking. The analysts are generally all very smart, all highly credentialed, and they all want to be PMs...on the other side of the equation no principal wants to tell investors that a young guy who they were giving his first shot to run money lost a bunch.

Feb 4, 2015

Analysts are not your typical analysts by bulge bracket standards. The analysts at hedge funds are typically in their thirties or have had significant amount of experience within the industry before. I know personally an assistant portfolio manager at a high income fund come in as an analyst at a hedge fund this may be an aberration but if you look at some of the profiles they have MBAs and significant experience.

Feb 4, 2015

too large a variance for any "averages" to be meaningful

Feb 4, 2015

Depends a lot on the fund's structure and performance, and how generous whoever decides your number is. Some places in that size range will have PMs running capital independently or have multiple desks for different strategies/industries/asset classes, others will be more centralized/generalist. If your fund is set up as a multi-fund or multi-manager structure your bonus pool may be determined solely or mostly by your team's performance. Regardless of structure, you're at the whim of what your superiors decide you're worth. If I had to guess a range I'd say 20-150% of base assuming an up year with incentives being earned. Sorry if this is too wide to be helpful but the reality is no one can predict the inputs to this-best source is someone with longer tenure at your fund who you feel comfortable asking.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

Feb 4, 2015

Here's a thread that emphasizes how cutthroat/volatile compensation can be:
http://www.wallstreetoasis.com/forums/hedge-fund-c...

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

Feb 4, 2015

Awesome link, once again, thanks for the info Kenny!

"You stop being an asshole when it sucks to be you." -IlliniProgrammer
"Your grammar made me wish I'd been aborted." -happypantsmcgee

Feb 4, 2015
carbeats123:

I've just accepted a new job as a credit analyst at a $2bn+ hedge fund. I've spent the last three years at a BB bank but have decided to make the transition to the public markets side. I have no idea what to expect for all in compensation. I'll be getting a base salaray of $110k but wasn't given an indication on what bonuses are like. Any thoughts? Ranges?

PM'ed you.

Feb 4, 2015

That's actually quite a small cut for a PM to take. So assume your team is managing $100 mm and the fund was up 25% that year. Your fund would receive 20% of the $25 mm as incentive and 2% of the $100 mm as management fees so that's $2 million + $5 million for a total of $7 million. Assuming that you're running a 2/20 model which is rare these days. So if we is taking 10% of profits he's only getting $700k in a pretty damn good performance year. Typical PM contracts are cut higher than that in my experience unless I misinterpreted this.

Feb 4, 2015

My thoughts exactly. Are we missing something OP?

Feb 4, 2015

I'm guessing the PM gets 10% of the net profits, or half the carry assuming a 20% incentive fee. Three analysts splitting the other half is still pretty generous.

Feb 4, 2015

Gray Fox, you are correct. The 20% performance fee is split 50-50 between CEO and PM.

So, to use madgames example, the performance fee for the PM (the fund he is managing) would be $25m*20%*50%=$2.5 or $25m*10%=$2.5 which yields the same answer. (I have here assumed $25m is net of 2% mgmt fees, if it is not the performance fee would be $25m - $2m=$23m*10%=$2.3m)

On this $2.5 cut would you think the split would be between the PM and the three analysts?

Madgames: Yes, it is run using 2/20 model. Your calculation is wrong as it is quite normal in the industry to calculate net profits, i.e. the performance fee is calculated net of profits (profits minus 2% mgmt fee).

Feb 4, 2015

You're not going to like this answer, but the way it works at a lot of funds is that incentive fees go only to partners - those with either equity ownership in the business or contractual "points" in the carry. Sounds like PM and CEO each have 50 points and the rest of you have nothing guaranteed. In that case, unless they are feeling super generous for some reason and you are extremely lucky and/or irreplaceable, expect all of your comp to come out of the management fee. You don't get carry just because you work at a hedge fund, unless it's in your contract. As a relatively new analyst, you don't typically participate that much in the upside unless you are already very experienced, which it sounds like you are not if you're asking this question.

Now, because the managers are getting paid nicely on the carry, they may not take much if any cash comp out of the management fee for themselves. (Although you never know, maybe it's time to buy a boat this year and stiff your staff. It happens.) In your $100m example, you might expect the 3 of you to share whatever's left of the $2m management fee after all the expenses of the business including your salaries, office space, travel, hard dollar research, etc. have been paid. Low six figures is possible, something in the five-figure range is more likely if you're young.

Feb 4, 2015

Thanks. I think the PM will share some profits. Why keep his analysts unhappy?

Feb 4, 2015

210981ur09u - Yeah it could be calculated either way. Typically PMs take a much larger cut because they are the ones inherently taking most of the risk. They pay the analysts just enough to keep them there (which can be plenty in a good year), don't want to piss them off or make them too happy at least in my experience. Just don't expect too much upside especially in a junior role

Feb 4, 2015

Thanks for comments.

Feb 4, 2015

You can find other posts on WSO that describe the profit split between analysts on WSO and their PMs. The quick summary is that the analysts generally expected some type of high-single-digit/low-double-digit % share. They were always given less than that expectation. Frankly, their expectation was not close to correct. You should expect 1-1.5x base salary in bonus, even in a good year. In a bad year, you should get 0.5-1x base salary--with the caveat that you might also get fired in a bad year, regardless of your performance/work.

There are some great posts in these threads about PMs having all the upside:

http://www.wallstreetoasis.com/forums/how-realisti...
http://www.wallstreetoasis.com/forums/seven-figure...
http://www.wallstreetoasis.com/forums/hf-analyst-c...
http://www.wallstreetoasis.com/forums/how-is-hf-po...
http://www.wallstreetoasis.com/forums/hf-comp-tabl...

Feb 4, 2015

Bump

Feb 4, 2015

sounds standard, what's your role?

Feb 4, 2015

Investment associate

Feb 4, 2015