Hedge fund managers’ pay saw an overall uptick of 5% to 10% in 2014 from last year despite less than ideal performance, according to a survey conducted by recruiting firm Glocap.
Its report said money managers at large funds—recording industry average performance—took home an average of $2.4 million, nearly an 8% jump from 2013.
“Hedge fund bonus pools continue to grow in 2014, inflated by management fee income, even if the performance contributions are more variable,” said Anthony Keizner, head of Glocap’s hedge fund practice.
Compensation for analysts overseeing more than $4 billion rose about 5.4%, the report said, reaching a total pay of $372,000. Meanwhile, portfolio managers and other senior officers at large hedge funds spotted little change in their base salaries in 2014, but saw bonuses climb 2% to 15%.
“Hedge funds will again be increasing their pay to retain and attract top talent, especially as more capital enters this competitive market.” —Glocap’s Anthony Keizner.
According to Glocap, fund performance was not the only factor to determine compensation packages.
“Firm compensation models also consider an increasingly broad and complex continuum of qualities, designed to reflect increased teamwork, risk-based capital returns, firm promotion, extending duration of incentives and scrutiny from both regulators and investors of compensation practices,” the report said.
Data provider HFR’s President Kenneth Heinz also stated there was an increased focus on balancing competition for talent from other industries and pressures for lower fees.
“The continued emphasis on performance generation, as well as increased emphasis of teamwork, firm profitability, and the decreased use of large guaranteed compensation packages, has contributed to a greater alignment of interest which properly incentivizes employees to expand their firms in a responsible manner,” he said.
Amid this trend, capital invested in hedge funds reached a record high of $2.82 trillion this year. Net inflows were also at their highest level since 2007.
“Hedge funds will again be increasing their pay to retain and attract top talent, especially as more capital enters this competitive market,” Keizner said.