I'm considering trying to break into buy-side Asset Management and was wondering *roughly* how much an equity portfolio manager at a good firm (I.E. Fidelity, Janus, American Century) can expect to earn all in per year? I've read that the average is around 500k, seems quite high.
How are Equity PMs Compensated?
While equity portfolio managers make a considerable amount of income, the all in comp will vary firm to firm. Some firms may offer different base salaries with a performance bonus that is a certain percentage of their annual performance. The numbers may also be a different depending on basis points (bps) and assets under management (aum).
User @Gray Fox, a hedge fund analyst, provides a very in depth example on how an asset manager would be compensated (note that these are hypothetical examples as what defines a large firm is subjective):
If we define an equity fund in excess of $1bn as large, that is $10mm a year in fees. This $10mm in fees equals $5-6mm in compensation. Mutual funds have to pay accountants, traders, HR, admins, legal, etc, on top of the investment team. Lets conservatively say analysts and PM's take home 70% of overall comp...This leaves $4.2mm in fees do support the investment side of a $1bn mutual fund. If 7-10 analysts get half of that, and the other half goes to 2-3 PM's (lets say 1 main and 2 secondary), the head PM is taking home 1-1.5mm a year. For the main guy to take home 8 figures, AUM for the fund would have to go up 8x or so.... There are not a ton of equity funds in the US running $8bn+ in AUM.
Here is a generic snapshot of what portfolio manager's salaries are based on years of experience.
If you have any more information regarding how specifically portfolio managers are compensated please comment below!
You can learn more about Hedge Fund compensation with the Wall Street Oasis Hedge Fund Industry Report.
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