Hedge funds closures hit a five-year high in 2014, while surviving firms cut investment staff compensation, according to HFR and Infovest21.
CIOs of funds managing $1 billion or more saw their average payout fall by $233,000 relative to last year, a survey by Infovest21 found. The typical base salary remained steady at $433,000, while bonuses dropped to $1.8 million from more than $2 million in 2013.
Hedge fund CIOs’ post-crisis pay peaked in 2012 at $5.4 million.
Investment teams overall earned slimmer pay packets this year. Portfolio managers’ compensation was slashed by more than half, from $2.27 million to $1 million, the survey revealed. Senior analysts fared little better (although still quite well by many measures) at $600,000—or $432,000 less than 2013.
“A possible explanation for their sharp drop in compensation is performance,” Infovest21’s report stated. For the 15 firms surveyed, year-to-date-performance through the end of October ranged from -3% to a high of 24%. On average, the funds returned 5.5%, while the S&P 500 gained 12%.
Still, others shut their doors completely. In total, 904 hedge funds closed this year—the most since 2009.
These exits included a number of major players, such as the Perella Weinberg Xerion fund, which at its peak managed more than $3 billion. San Francisco-based Lonestar Capital Management also liquidated following a 2% loss through the end of October.
2014 in general—and October in particular—was “difficult” for the industry, according to the survey analysis. “Some hedge funds have responded by diversifying their product offerings and becoming asset management firms,” the report noted. “Others have lowered fees.”
The full report is available from Infovest21.