HF Comp Breakdown ? - L/S Equity value-oriented $150mm AUM Family Office
Was offered a first-year investment analyst position at a L/S equity hedge fund. The fund is a bit different however as it the private capital of two UHNW individuals. It used to invest outside capital, but not anymore. About $150MM AUM with 60% long 40% short. I've been working for the main person for 4 years in a portfolio company acquired through their PE fund. The HF is managed by one of the HNW individuals, who manages a portfolio of companies and CRE, and one PM would spends most of his time with a portfolio company. Then it would just be me as the analyst working full-time on the fund. This is more like a family office in the mid-west.
I passed CFA Level 1 in February and the previous analyst left so that is how I got the opportunity. I'm studying for L2 this February and plan and completing the CFA by next February.
With that background, what are good ranges for base comp and for bonus comp %? And how would I negotiate/ set criteria to determine bonus comp %?
$150K base + 100% bonus as a first year. These set ups trigger all sorts of red flags for me though. These people usually have no idea what HF comp should be and they usually hate paying people with internal money
Really, even at a 200mm AUM shop? 100% bonus?
Red flags galore!
I agree with the other poster on red flags, (most) family offices absolutely hate paying employees out of their own capital. You could crush it there, work 24/7 and still not get paid. These types of setups also provide highly questionable exit ops. I would get in writing how you are going to get paid for your a bonus. Whatever they tell you is likely to not come to fruition unless its in writing.
Why exit a problem?
It's an unknown firm with no outside capital. Anyone who ever looks at your CV is going to question your time there. By question I mean: was it a real place? did you do anything value add? Who trained you? Etc...etc...
I've done reference checks for former juniors who took roles like these in the past, they all had a very hard time finding their exit. Basically established funds who looked at them for future jobs wondered if their time spent there was wasted.
Just a word of caution. There are positives of course, if the two guys are good ppl who reward you well, there may be a path to run a small pool of capital. These are items you need to flush out before you sign on.
Unfortunately in this industry the negatives happen much more than the positives, so go in with eyes wide open.
Best of luck!
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