How does compensation in AM compare to L/S HF?
My personality is very much that of someone at a long-only asset manager - more interested in primary research, less worried about the quarter, more interested in long term winners. However, the lack of seats and lack of actual datapoints around AM compensation make me really worried? Wondering if someone can share some insights
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What do you mean by worried? Worried that you're going to be making significantly less than your peers? Worried that companies will try to short change you?
The lack of seats usually means most people are later in their career and probably arent wasting their time on this forum giving out data points
Asset management out of undergrad generally pays 75-85k base depending on the city, and then a 20-60k bonus largely depending on how hard your group works you.
Hedge funds usually pay the same base but a larger bonus. This is because the cultures tend to be much more intense, although this obviously depends on the fund.
I only know a couple people who joined hedge funds out of undergrad. They make ~180k all-in, but they are working close to banking hours.
Edit: Comments below clarify that a top hedge fund can pay more like 225-300k for first year analysts. This blows asset management comp so far out of the water that it isn't even worth considering it.
i agree with this. also work 40 hours a week, amazing work life balance, ~$120k all in comp from work. LCOL city. plenty of time to do side hustles too, which is where majority of my income (50-80%) comes from. need that security though to be able to afford to take those types of risks.
Do you mind if I ask what kind of side-hustles do you pursue?
Whos base pay is 75-85k at a HF, thats less than half standard. Unless you are going to a micro HF, base is at least 150k.
150k might be market, but it sure isn't the market my friends and I were getting offers in. Even the places that had higher bases (Bridgewater and AQR) were around 120k but with bonuses generally around 40-60k, making all-in comp not too different from the number I suggested.
The only people I knew who had 150k base were working at DE shaw, Citadel, etc, but I assumed the original question was framed around fundamental research.
If you know a fund that pays 150k base for a fundamental research analyst straight from undergrad, drop their name and I will submit my resume immediately.
Most established long-onlys pay research associates $100-200k/year (0 to 5 years of experience). Once you become an analyst, comp is materially higher ($300k+). Overall, comp is pretty good, but the HF route is much more lucrative, especially for top performers.
Spot on.
Similar-ish model in ER.
Depends on how good you are. You don't see data points because comp down the road isn't standardized. Analyst, Trader, APM, and PM are all generic titles and comp depends heavily on what the role entails (responsibilities, coverage, qualifications, etc.) and performance.
Numbers above are good for junior positions. Senior roles can have plenty of upside--the top equity PMs can break eight digits.
For $10B+ AUM firms this is feedback I got from a headhunter.
Associate/pre-MBA: $70k-$200k
Post-MBA/5-10 year analyst: $200k-$500k
10+ year analyst: $300k-$2M
PM: $500k-$50M
The ranges are wide and depend on things like performance, firm economics and politics. Most HF analysts do not make more than long only analysts but the outliers do. HF is also a far more volatile path with low job security and only those who make PM and perform will outearn long only peers in the long run. In either path performance is key to moving up the pay ladder.
I think this is roughly right
Can be a bit higher on the upper ranges for each point you make with great performance in a great firm.
The lower ranges you give are probably the absolute bare minimums, apart from maybe PM -> can be lower for a junior PM with poor performance - this is like in a HF (in an MM if a PM doesn't perform they get $150k base salary only), in LO will be more than this but a junior PM with no performance maybe gets $200-400k as minimum with poor performance. ie. I would change your PM range from $200-400k - 50m+
How would you define a junior PM? Someone who recently became a PM, after a 10+ year analyst gig?
Disagree, his numbers are very accurate tbh. He clearly gave wide bands intentionally.
I work in a long-only, "accredited investors only" high-yield/distressed debt role. I guess I'd call it AM but some days (looking at distressed deals) it seems more like HF.
My advice is if your personality strongly points you toward long-only, you'll probably have a better chance of succeeding (and therefore making more money) if you go into a role where you're doing long-only.
For example, while L/S seems interesting, private equity, by comparison, was something I never had any interest in; I would have disliked PE and done poorly if I'd chosen to pursue it based on big comp. I'm not attacking PE, I just knew that being married to a big investment decision for years on end with no liquidity to cut losses and move on if the initial analysis was wrong was something I wanted no part of because it wouldn't work with my personality. Also, I prefer to sit on a desk across from our trader wearing a button-up and jeans and cursing at politicians and talking heads that come on CNBC/Bloomberg instead of sitting in a meeting with investment bankers wearing a suit and tie. I can and sometimes do sit in meetings with investment bankers while wearing a suit and tie, but it's an occasional thing and I prefer it that way.
You know what you want. Trust your gut. When you're older, you'll thank yourself.
This is well said. Personality / philosophy alignment matters a lot.
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