The total annual compensation of an entry-level equity analyst at a mid-performing hedge fund rose to $353,000 this year as fund assets surged to record highs, according to industry research.
While base wages for analysts were unchanged from 2012, bonuses for analysts rose by between zero and 10 percent, according to a study by hedge fund management search firm Glocap and Hedge Fund Research (HFR), the industry research firm.
Portfolio managers at large funds in 2013 averaged total annual compensation of $2.2 mn each as changes in bonuses varied widely, from a drop of 5 percent to an increase of 20 percent, the report notes. Increases for other hedge fund staff were generally lower than those for analysts and portfolio managers.
The boost in bonuses comes as 62 percent of all existing hedge funds reached their record high valuation at some point between January and September this year, the research shows. In the first nine months of this year, the HFRI Fund Weighted Composite Index, the broadest measure of the industry’s performance, rose 5.5 percent.
Industry bonuses could have climbed more in the hedge fund industry if it weren’t for a general decline in compensation in the banking industry and unchanged compensation in private equity, according to the research.
‘Several important trends defined the compensation picture for 2013,’ explains the report. ‘In general, 2013 saw increased hedge fund hiring, with an emphasis on qualified entry-level positions, in contrast to prior years’ focus on legal, operational and marketing hires. As a result of the increase in hiring, qualified candidates more frequently received multiple offers and the duration of searches (from posting to fill) was shorter.’
Of particular interest to hedge fund recruiters were candidates who had a history of ‘internal-facing roles but were capable of being market or client-facing.’ This trend, Glocap says, reflects increasing demands for closer relations with investors and increased transparency.
