What do you guys think is a typical/fair compensation for an analyst (say age 28-32) in a large (>5b) established multistrat fund in NYC? What comp level do most people tend to flatten out at (and at what point in their career), assuming they do not become PMs?
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Bump! We definitely need an update on comp from NY HF people
It's too variable to give a "typical" comp number. I know first years at a large multi-manager that made $1mm+ because their team had a strong year. I also know guys who have been around a while and didn't get a bonus because their team had a weak year. It also comes down to how generous your PM is with P&L and obviously how well you perform individually.
All things considered, I think an experienced analyst at a large fund should probably expect $500k+ in a decent year. Comp doesn't really flatten out with more experience - you'll likely have good years where you get outsized rewards and not so good years where your bonus could be nothing.
So is it like $250k base + bonus?
Probably lower base. My fund base is $125k - $175k depending on experience. Vast majority of the comp comes from the bonus. Again, this is highly variable depending on fund, performance, PM, etc.
I've commented before on these types of threads and it depends 100% on your PM and fund and year.
But to take a stab at it, fair = $200k base, $200k bonus.
Bonus can be $0 or $750k though.
For a 5bn platform, you probably have about 30 teams. It is probably levered 3-4x so you have 15-20bn notional, so ~500mn notional for your average team. The average team should be making 5% on their notional, and PMs can take 20% (sometimes more) of P/L to pay themselves and their teams. They typically keep 80% for themselves and distribute the rest to their analysts. So your team makes 5% on 500mn, or 25. PM gets 20% of 25, or 5mn, to pay himself and team. Out of the 5, he keeps 80%, or 4mn, and distributes the rest, 1mn. You can usually run 500mn with 2 analysts, so that's about 500k per analyst as your base case scenario.
If you're a senior analyst on a big successful book, this can be much more lucrative. Say your team makes 10% on a 1.5bn book, that's 150. PM gets 30 to pay himself and team, keeps 24 and distributes 6. Say you have 6 analysts on your team. Chances are half are going to be more senior than others, let's say we pay a senior guy double a junior guy. So 4mn spread over 3 senior analysts, and maybe one analyst has a particularly great year so he gets half of the 4mn. You're looking at a 1-2mn ceiling essentially, and I'd say that's where you flatten out for a lifelong analyst that never makes PM. Usually it's guys (or girls) in their 30s and above that are looking at this kind of money, maybe late 20s if they got an early start.
For that first year mentioned above who got 1mn+ in a good year, he must have been a big contributor or his PM must have really liked him or been very generous. To be a senior analyst that can consistently clip 1-2mn a year is not at all easy, and if you have those kinds of skills, it is a very respectable career path all on its own.
This is for a multi manager right? What about for a large single manager fund where there is one PM?
How do PMs at multi-managers make 20% of P/L when the fund's performance fee is likely similar (maybe more at some, but still)? If the PMs are all taking home the vast majority of performance fee what is really left for the founder(s) / equity partners / fund owners? Have heard of PMs getting 10-30% of P/L but never quite understood how that works in practice (i.e. what is left for the people at a senior level of the overall fund if PMs are getting almost all the performance fee?)
Fund is levered up
Just a few data points from my side. I worked in the London office of a USD 3 bn event-driven fund (we did merger arb, special sits and distressed debt) between 2013 and 2016. As a first year analyst with 3 years experience I was paid a base of GBP 85,000 which translated into USD 130K at the time. Bonus was roughly 1x base. A colleague of mine, who had about 5-7 years experience was getting a base of GBP 120,000 which was USD 180,000. I think he was earning roughly USD 500,000 all in. One of our PM's, after a few too many drinks in a swanky club in Mayfair, told us that one of the guys in the NY office, who was considered to be the best analyst on the team, was taking home USD 1m all in after a good year.
Generally people on this site overestimate buy-side HF comp. You hear stories of analysts at Elliott or York raking in big bucks but those guys are the best of the best and not at all representative of the average HF analyst. Also, PM's view you as replaceable and will give you the bear minimum needed to prevent you from looking elsewhere. Once you've survived the initial shake out period (generally 2-3 years) and start to generate decent ideas, you might get direct P&L linkage and that's where the real money can flow....assuming the PM doeesn't take credit for all your best ideas.
This.
There are many kids out there working for free/part-time at HF's or making $100k-$120k base and in a bad year that could be all they get.
Thanks for the great response Ovechkin
For London only and a fairly large sample set: large places pay 150-230k pounds as base salary for someone with a few (2-3) years of buy-side experience. Start-up HFs pay as low as 120k base comp. Bonus for large HFs is around 100-150% of base, so best case around 600k pounds all in for someone who has around 7-8 years of experience, call it mid-level. Bonus has a massive range, the larger the AuM, the lower the bonus as basic rule. Note that overall comp at large places is fairly consistent across the cycle, whereas when a startup has performance swings your bonus can be significantly lower.
$400k - $600k base case
Thanks
Do you think the next level ($1M) is more of a step function? Or does it just happen gradually?
Depends a lot on where you're at. There's always going to be some level of volatility in pay, but it can be dramatically different based on the type of large multi-strat you're talking about.
At most large places, if you're a mid-level employee then I think your comp could be anywhere from 300k to 2mm depending on how good/bad the year was and how stingy / generous your PM is. If the large multi-strat you're referring to is a multi-manager, it's likely even more volatile than this. If you're on a PE-style credit team at a large multi-strat, they're probably giving you points/carry (if mid-level) the worth of which is also quite volatile. Note I think you generally need to wait for the fund life to be over to get this.
Base case, I don't know where exactly you are (depends on what path you took to get to where you're at) but you can kind of expect the following with volatility around it increasing at each title: Analyst: 250k to 350k Lower mid-level: 400k-600k
Buddy of mine made $125k base / $75k bonus his 1st year at a long/short fund ($5 - $10bn) 1 year out of banking to the extent that is a helpful data point
I got paid 300k all in despite exceptional individual and firm performance after 1.5 years on the buy side. I think my pay is probably far above average and most people I know make far less. I generally don't think performance has any clear relationship with pay. Pay might give you some job security but it doesn't really affect compensation. Your compensation is approximately equal to what you would have made if you had stayed in banking or PE if you are a good performer and I think you just get let go if you are a bad performer. It's honestly not a great deal until you get a book of your own money to manage. Frankly it's utterly bizarre the industry works this way.
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