Hedge Fund Compensation Takes a Dive

Between bonuses and base salary, pay packets have shrunk by nearly half.

UK-based hedge fund managers have seen a sharp decline in compensation over the last two years, according to salary data tracker Emolument. 

The median base salary for director-level professionals fell from £120,000 ($199,000) in 2012 to £101,000 in 2013. This year, it has dropped again to £90,000.

“Over the last few years since 2008, hedge fund managers have been more willing to show flexibility when it comes to management fees, which is why base salaries have been eroding thus,” said Robert Benson, the data firm’s CEO.

Compared to base salaries, bonuses took an even deeper dive between 2012 and 2013, from £135,000 to £40,000. The median incentivized payout recovered somewhat over the last year to £85,000.

Benson noted that hedge fund directors “are at a particularly volatile level when it comes to bonuses as they are deemed expensive by their firm but not so senior that they are absolutely essential to the business, therefore seeing their bonuses slashed dramatically.”

Macro hedge funds, one of the leading strategies by assets under management, has improved its performance in the year-to-date but is still suffering outflows, according to eVestment data. A total of $2.5 billion was withdrawn during July alone.

Still, industry-wide hedge fund assets remain above $3 trillion.  

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