US hedge fund manager pay averages $563,000

Individual hedge fund portfolio managers currently receive average remuneration of $563,000 (€548,338), according to a survey of 71 US-based hedge funds carried out by Infovest21.

Almost half the remuneration is formula-based, with the rest based on subjective appraisal. The remuneration is frequently picked up by founders of firms, who can own up to 100% of the equity. Heads of sales earn $389,000 and risk managers pick up $317,000, the survey by the industry news agency found.

Frank Carr, managing director of survey sponsor Diversified Search, said: "The biggest challenge this year is how managers with flat or negative performance will determine bonuses for their top employees. Between scarce incentive fees, high watermark issues and fund closings, there will be significant movement among hedge fund professionals at the end of this year."

Key manager concerns include the issue of how to determine deferred equity payouts for top performers and calculate the extent to which operations should be outsourced.