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Hedge fund managers continue to lead the way in terms of total compensation, weighing in at $1.2 million a year, according to Greenwich Associates' annual study of the U.S. fixed-income markets.
Hedge fund managers continue to lead the way in terms of total compensation, weighing in at $1.2 million a year, according to Greenwich Associates' annual study of the U.S. fixed-income markets. The hedge fund group's average salary increased to $210,000 from $195,000 in 2003, but saw a slight decrease in bonus average, with respondents bringing in an average of about $1.04 million, down from $1.07 million in 2003 (see charts, page 10. For additional charts see the CIN Web site). "Overall, in terms of level, hedge fund fixed-income investors were the highest compensated, more so than any other firm," said Talley Ledger, associate director, institutional research and marketing at Greenwich. "Even though they didn't witness much growth in overall compensation levels, they still remained the highest income earners."
Overall, U.S. fixed-income investors received an average salary increase of 3% to $150,000 in 2004; bonuses rose 10%, averaging $265,000 last year. On average, total cash compensation increased 8% to $415,000. "The overall theme for our results in 2004 was one of healthy gains across the board and that is consistent with the strength of the fixed-income markets," Ledger said.
As flat as hedge fund manager compensation may have been, there was not any other group closing the gap. Employees at banks, investment advisors and mutual funds followed in step. Bank employees brought in about $395,000 in total compensation in 2004. "That is a big gap between [banks] and hedge funds, which are earning $1.2 million," Ledger explained. "Something really drastic would have to change in order to close that gap. Could it happen? I guess so. Is it going to happen in the next year or so? Probably not."
There is, however, a big gap between what hedge funds earn on the salary side versus what its employees earn on the bonus level. "There is a lot less certainty for hedge fund employees as opposed to some other institutions, where you can rely more on salary than you could potentially at a hedge fund," he said.
For total compensation, banks were up from...