How much am I worth? UK portfolio manager, mid-sized UK fund manager

It is often said that there is nothing like an economic downturn to make star performers stand out from their mediocre colleagues.

This maxim certainly holds true in investment management. With some understatement, Tony Tucker of the headhunting firm ERG said: "This is not an active market banks are not bidding up

for people they way they were."

The unsettled conditions have confounded many of the less highly regarded portfolio managers, but proved to be the making of others, headhunters say. While most are having to make do with packages that reflect the difficult market, the stars are enjoying higher remuneration than ever.

Indeed, with most portfolios having posted negative returns over 2001 and into 2002, it would appear firms are becoming desperate to hold on to those who can make money in a difficult environment.

Simon Bell, head of asset & private wealth management at Alexander Mann Global Markets, said the most interesting UK barometer of fund managers' successes and woes is the FTSE All Shares index, which accounts for the bulk of individual and corporate portfolios and

is thus exposed to "constant analysis, structuring and restructuring within

the varied universe of fund management companies."

Bell said: "Continuity of fund strategy and associated performance history is the key to success"

for fund managers.

While the mantra running through investment literature that "past performance is no guarantee of future performance" remains true, Bell and other headhunters point to a Reuters/Citywire survey last month that found past performance is nevertheless a pretty reliable indicator of the future.

The survey of over 800 UK fund managers found that over the past few years track

record has been the single most important predictor of future investment performance, with base salary and bonus of portfolio managers paid accordingly.

About 77% of UK fund managers who were top quartile in 2000 were once again top or second quartile in 2001, while those managers who were fourth quartile mostly failed to rise to the top of their game in the same period.

In other words, those who were successsful in 2000 have consolidated their position at the top of the portfolio manager pile - with total packages that can top 500,000+ in the top firms.

The also-rans have stayed that way, with all the signs suggesting little change in the future. For such folk, total packages could be under 100,000, particularly with bonuses down this year.

Dev Majithia of the headhunter TMP Worldwide said the widening of pay differentials was noticeable at all levels of seniority. It applied to salary as well as bonus, with the best performers "treated like gold dust."

He expected this trend to continue even when equity markets pick up again, with companies moving away from tracking indices - the least risky way of staying afloat in a difficult, bearish market - and back towards more active fund management.

Figures and commentary were provided by the following firms: Alexander Mann Global Markets, TMP Worldwide and Executive Resourcing Group (ERG).