Salary survey: Hedge fund pay marks time

Money is pouring into hedge funds and profits at the most successful have soared, making fortunes for many senior staff. But salaries of hedge fund employees have remained static in the past year, a survey shows.

EM Finance, a search firm, found junior research analysts at hedge funds in London earn 45,000-60,000 (€68,000-€100,000), plus a bonus in 2003 of 50,000-90,000. Senior analysts earn 80,000-130,000, plus a 100,000-450,000 bonus.

From its survey of 40 to 50 job seekers, plus about 20 desk heads at funds with over $600m

under management, EM found that portfolio mangers typically earn salaries of 80,000 to 120,000, plus an 8%-10% share of profits made by the funds they were responsible for.

Andrew Morland, manager of financial services recruitment at EM, said salaries have remained mostly static over the past year. It was hard to generalise about bonuses as they depended on the success of an individual's or team's strategy, said Morland. But the latest bonuses tended to be biggest at high-performing hedge funds pursuing credit and fixed income strategies.

Equity strategies had produced reasonable bonuses, while event-driven merger arbitration investments had found little success, said Morland. Bonuses in that area were accordingly not as high as in previous years.

Another pay survey, by the recruitment firm Morgan McKinley, found similar pay levels for senior hedge fund staff.

It also looked at pay further down the ranks. Hedge funds' middle office staff in London with four to eight years' experience can expect salaries of 47,000 to 65,000, while operations staff earn 38,000 to 65,000. The survey was based on interviews with over 150 job hunters.

Jeremy Canning, head of fund management at Morgan Mckinley, said pay at hedge funds tends to be higher than at investment banks for many back office staff. "If you work in operations and are paid a basic of 40,000 to 50,000 at an investment bank, market conditions dictate basic salaries could be upwards of 20% more at a hedge fund."

Bonuses paid to operations staff in hedge sometimes reached 100% of salary last year, Canning said. This compared to an average of about 20% in investment banks.

However pay in investment banks is rising, which could force hedge funds to increase their own pay, Canning said.

Other headhunters said hedge funds had to pay a premium over banks as the hedge fund sector was so volatile, with hundreds having gone bankrupt last year.