Entry Level Hedge Fund Salary

aeneous's picture
Rank: Monkey | 31

How much would a 1st year at a $1.5B aum hedge fund with about 20 guys expect to make?

Small Hedge Fund Associate Salary

Your salary will largely depend on the size of the hedge fund that you are working for considering the 2% and 20% structure. However, the general consensus is that analysts coming out of undergrad can expect to make between $60 - $80 k (as of 2010).

One user shared that they worked at a relatively small hedge fund with pay of $60,000 and a bonus between 50%-100% of the base salary. He worked around 60 hours a week in a non-trading role.

While all salaries will differ - the Wall Street Oasis Hedge Fund Industry Report offers a detailed look at salaries in the hedge fund world.

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Comments (42)

Mar 5, 2010

Out of undergrad? No idea, I don't know why a hedge fund would hire an undergrad. Normal hiring (at least 2-3 years of experience) I would think base salary around $100k with a bonus dependent on performance, if you are up 10% I would think maybe $100k bonus IF you have 2/20 economics. Above 10% returns for the year and your bonus probably can grow pretty large but it all depends on what kind of economics the fund has and your annual return. By the way, I'm not sure who told you $1.5 billion is a small hedge fund, in the hedge fund world no one would call that small.

Mar 5, 2010

if you're getting 100+100 out of undergrad you should be VERY happy. what kind of role is it? if it's non FO, maybe 55-65 + up to 100%. FO maybe 70+70 is realistic. i agree 1.5b is not small.

Mar 5, 2010

I was suggesting 100+100 With experience. I've never heard of anyone making 100+100 straight out of school.

Mar 5, 2010

actually, there's a hedge fund recruiting at Harvard college with a BASE of $240k.

Mar 5, 2010
Lord:

actually, there's a hedge fund recruiting at Harvard college with a BASE of $240k.

Do you mind telling us which hedge fund this is? I know it's not de shaw, citadel, or AQR.

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Mar 5, 2010

You mean undergrad? I think that isn't true and is probably a typo. If it is true that is the greatest job in the history of finance.

Mar 5, 2010

hey guys, thanks for the replies. this is for straight out of undergrad. the firm's been around for 5 years or so, and they've annualized 25%+ returns for the past three. assume a trading/quant analysis position. anyway, assuming a 2/20 fee structure, there seems to be plenty of money to go around. that's why i was wondering about the comp structure.

thanks

Mar 5, 2010

2 years into the job my friend at a 1B fund was making 400K+ net (don't know his first year, but the escalator is quick if you prove that you're good)

Mar 5, 2010

hmm they need anyone else? seriously, email me. hehe.
based on the added info, i would revise my estimate upwards. ultimately it comes down to the partners' philosophy. some guys will never pay a young guy a lot money. some believe in paying top dollar to get top talent. also, with numbers like that I wouldn't worry much about what they pay you.

Mar 6, 2010

it is totally variable..ive seen analysts at top tier funds make as low as 50-60k base salaries and i guess someplace above is paying $240k to a harvard grad, so it could be anything.

BTW 1.5BN is not a small hedge fund.

Mar 6, 2010

I think that 240k thing is bullshit. Some fund called "Spark" is always advertising that at HYPS (including for their HR and IT people), which I find nearly impossible to believe.

I wouldn't get your hopes up. While a couple fund managers may be extremely generous and pay a lot, most will not pay you more than they must to keep you, assuming you're good. I would expect 70 base + between 30 and 60 bonus.

Mar 6, 2010
CashCow:

I think that 240k thing is bullshit. Some fund called "Spark" is always advertising that at HYPS (including for their HR and IT people), which I find nearly impossible to believe.

I've seen this company too. They put a 200k+ in the title of all their job postings (even "technology recruiter"!). Based on what I read, they seem like a quant fund. Anyways, here's their Company Description from my college's job postings:

Job Posting:

Company Description

We are the next-generation hedge fund. For over a decade, our outstanding people, many of whom have PhDs, have been developing the next generation of technologies, ideas, and strategies, three to four years ahead of our competitors. We have been highly successful because of both our technically superior strategies and our brilliant people, a close-knit group of alumni from Harvard, MIT, Cornell, and other such elite schools. This lucrative synthesis of human and machine cognition in an intellectually rich, supportive environment is at the core of our firm. We support high performance real-time systems in a Linux environment.

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Mar 5, 2010

hey if someone with access to that 240k post would care to PM the text of it to me, I would enjoy reading it out of curiosity. you can redact the relevant contact info if you're concerned

edit: in return I could exchange a bit of color I just dug up

Mar 5, 2010

ohhh that one ... that's funny. I had seen that post before elsewhere and had immediately pegged them as DE Shaw due to the overwhelming pomposity. (next gen, brilliant phds, please.) i say it's funny because my intel revealed that they are a spin off from DE Shaw ... so I guess it makes sense.

anyway sorry for the semi threadjack, OP's fund sounds more interesting

Mar 6, 2010

My friend is in a "small" 2.2 billion aum hedge fund out of undergrad, but the portfolio manager that he is under only manages 300 million of that 2.2 billion.

His pay is $60,000+ 50%- 100% of salary as bonus..

He is a 1st year analyst (non trading role) . He works about 60 hours a week give or take. Not too bad for a recent college undergraduate

Compensation will vary greatly on how much money your pm manages.

Mar 7, 2010

Expect $60-$80K fresh out of UG

Mar 27, 2013
forexcrazed:

does one have to be graduate or even undergraduate to get recruited to some of these jobs?
would sheer analytical and trading experience( +165% p.a. track record) but on a much smaller amount be any help to land a ++200k paying job? no relevant university degree, but a lot of experience and track record in forex and indices/ commodities. please let me know where one with that kind of background would be standing. thanks,

Id be surprised to see someone in an Investment Analyst role without a college education, regardless of track record. When I was going through the process almost every fund even wanted to know my SAT score.

Mar 28, 2013

Street base, 50-100% bonus is about right for $1bn fund. I think of street as 75k but not everyone has caught up.

Mar 28, 2013

40-50k

Mar 28, 2013

In research, you generally start as an associate then eventually make your way up to analyst/MD. So the structure is this:

Associate
Senior Associate
Analyst
Senior Analyst

Then it can vary on whether you want to remain an as an analyst and go into an MD of research role, or want go to on the PM track.

Mar 28, 2013

Thanks! I thought i'd make it more general for people not in the business to understand because it's a little different than the banks.

The way it works on my team of 6 is like this:

Associate (which is me)
Senior Associate
Director
Senior Director
Managing Director
Senior Managing Director

Mar 28, 2013

Also, I am not in research. I am in a portfolio management team.

Mar 28, 2013

I'd rather not share specific comp or firm details (PM me if you want), but my firm is typically Associate -> Analyst -> PM, with various titles along the way... some analysts are Directors, some are VP, etc. I'm an associate and although starting comp was low, it is expected to ramp up relatively quickly and the jump once you hit Analyst is quite substantial from what I understand

Mar 28, 2013

As am sure you are aware it varies from situation to situation (location, experience, division, etc.) but what is more important is whether you are willing to keep your pay flat to stick with the fund.

That also depends on your specific situation but if other offers arent flowing-in and your committed to work in the HF industry - then there really is no decision to be made. If you have a bunch of other offers to leverage - great.

If not is it really worth it to beat yourself up over a few thousand pounds? If you perform well over time, you will be compensated.

Mar 28, 2013

depends on how junior you are. i'm at a top-tier HF front-office analyst role right out of undergrad, and my all-in pay is similar to IB pay, but my work hours are market+2 or 3. That's a potential benefit you may be able to look forward to.

Mar 28, 2013

Thanks for the replies.

I know that lifestyle will be better, and given the group it is for, I do think bonuses will be better than IB. I mean I expect the bonuses to be 100% and upwards of base, which wouldn't happen in my position in IB at my level.

I guess the question really is if this is standard practice on the base salary? I just expected them to sweeten the deal on the base compared to what I have. Or are you guys basically telling me that it very much varies and this is not something unheard of. I want to know what my negotiating position is here... I doubt I'll be happy/accept if they don't budge and provide a bump, but what's the chance of them not doing that?

I also could go interview elsewhere, but don't really want to, to be honest, as I think the group is great. Got the offer relatively early on (not to say it was a short interview process), so am slow on the other processes at this point. I know in PE the base would be higher, but don't think that's what I really want.

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Mar 28, 2013
hmmsk:

Thanks for the replies.

I know that lifestyle will be better, and given the group it is for, I do think bonuses will be better than IB. I mean I expect the bonuses to be 100% and upwards of base, which wouldn't happen in my position in IB at my level.

I guess the question really is if this is standard practice on the base salary? I just expected them to sweeten the deal on the base compared to what I have. Or are you guys basically telling me that it very much varies and this is not something unheard of. I want to know what my negotiating position is here... I doubt I'll be happy/accept if they don't budge and provide a bump, but what's the chance of them not doing that?

I also could go interview elsewhere, but don't really want to, to be honest, as I think the group is great. Got the offer relatively early on (not to say it was a short interview process), so am slow on the other processes at this point. I know in PE the base would be higher, but don't think that's what I really want.

Comp is going to be dependent on AUM (obviously). If you're straight out of undergrad, then I would expect all-in comp to be around that of a middle/top bucket IBD analyst (which is great, considering you'll likely be working considerably less). Your bonus will also be dependent on fund performance; you aren't guaranteed 100%+ of base. Also, you probably have no negotiating power if you're going to a top fund and would still be an analyst if you were in IBD.

EDIT: Like every post about HF comp on WSO the answer is....drumroll....it varies.

Mar 28, 2013

To be honest, you don't have much negotiating leverage here. Why would they sweeten the deal? What incentive do they have? You are a junior resource that they can find elsewhere. If you're coming out of undergrad, your candidacy isn't THAT special or unique.

You say you won't be happy or accept if they don't budge. Oh well. They'll see you as someone who cares more about the short term gain than the learning opportunity and long term upside. Do you really want to spend more time and resources recruiting elsewhere because they won't bump up your base by 10k or so, especially if you've said you think the group is great?

Mar 28, 2013

Aside from the obvious fact that the answer to every question about HF comp is "it depends", bear in mind that junior IBD comp is likely approaching a peak at the moment. The current combination of elevated base salaries, reduced hours, and a return to >100% bonuses is probably unsustainable. If anything, I think you are doing well to maintain the same base as you are getting in banking. It is also a job with generally better hours, more interesting work, and opens a career path with significantly higher potential earnings power in the longer term.

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Mar 28, 2013

I've said it elsewhere and I will say it again, making the decision of where to take your first HF job on the basis of comp is extremely short-sighted (and I will also repeat, that is not necessarily the case several years in)

Mar 28, 2013
xqtrack:

I've said it elsewhere and I will say it again, making the decision of where to take your first HF job on the basis of comp is extremely short-sighted (and I will also repeat, that is not necessarily the case several years in)

Yes, this is exactly true. As I have learned throughout my career - the knowledge that you gain by working at a HF is invaluable. You will also be pivoting your skillset and changing the future trajectory of your career path (which is valuable). It is definitely not unheard for IBD salary to be comparable to a first year HF.

Just because you did an IB stint does not mean that you will have the turn-key skills necessary for HF - they will probably need to train you and your first year / two years will be an exponential learning ramp-up period. You will be getting more value out of the experience than the fund. Down the road, you will have plenty of opportunity for salary and bonus advancement - especially if you perform well.

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Mar 28, 2013

As an undergrad, what do you think you have done to deserve a higher base pay than others? Seems rather entitled to me.

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Mar 28, 2013
DickFuld:

As an undergrad, what do you think you have done to deserve a higher base pay than others? Seems rather entitled to me.

I thought I was clear but I guess not - 1) I've done my IB stint already and 2) this was to see where the market is at; i.e. is IB analyst base (at a bank that has recently raised the base) comparable to HF or should I expect a bump up / can I negotiate one

Guess the answer has generally been that the base salary can be expected to stay the same and is no biggie if that's the case. Confirmed this with information outside this forum.

Though let's also put it this way - knowing the offer is generally comparable to market, nothing bars me from trying to negotiate up, we're ambitious people anyway, aren't we? I may get a bump, I may not. However junior you may be, when you're switching jobs you have some negotiating power and its a mistake to think not. You're not coming out of undergrad desperate to get an offer, instead you're coming from a good institution with good pay, a specific set of skills that they're trying to get on-board, and you are the guy that passed their interview stages after all, so you're their best option.

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Mar 28, 2013
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Mar 28, 2013