Hedge Fund Reader : Higher Compensation for Hedge Fund Managers

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July 12, 2005

Higher Compensation for Hedge Fund Managers

A 2005 Investment Management Compensation Survey conducted jointly by the CFA Institute Russell Reynolds Associates points out that senior investment professionals have seen much higher growth rates in compensation than other US-based professionals. For investment professionals with 10 or more years of experience, compensation has grown 20 per cent to USD 240,000 as compared to 17 per cent for other senior professionals. Among investment professionals, the survey points out, those employed by hedge funds out-earned their peers earning 47 per cent more than overall median compensation. The most significant component of this increase was incentive compensation at hedge funds, accounting for between 30 and 40 per cent of total median compensation. Another important factor that affected compensation was earning the Chartered Financial Analyst (CFA) designation. The highest paid professionals were those with both an MBA and a CFA designation, followed by those with only an MBA and finally those without either designation. Among other factors affecting compensation was job function with operational, international and fixed income functions registering the highest increases in compensation. Chief Operating and Administrative Officers saw incomes in 2005 rising by a whopping 60 percent over 2003 to USD 320,500. Hedgemedia.com reports:

"The compensation findings are consistent with the growing demand for senior investment professionals. Driven by increased regulatory pressures and an industry emphasis on compliance, the quality CAO/COO is on this year's most wanted list, particularly in the hedge fund community."

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July 12, 2005 in Research | Permalink