Hedge funds are increasing the rewards for junior staffers, boosting pay by over 10 percent in the past year as they hurry to catch up with the pace set by investment banks.
Claude Schwab, chief executive at the hedge fund search firm Schwab Enterprise, notes that top juniors at banks are now earning six figures annually. "Funny how banker analysts used to look with envy at hedge fund analyst pay," he says. "But now that banks are doing so well, hedge funds are looking to see what bankers get paid at the analyst level."
It's not a U.S.-only trend, either. Peter Elliott, director at recruiter Emerson Chase City, says it's evident on both sides of the Atlantic. Dermot Coleman, a director at the London-based fund Sisu Capital, tells eFinancialCareers that trainees who scale the ranks are being given ownership stakes. "When someone joins as a graduate, they need to know how they will become a principal of the fund - whether through direct equity in the management company or a stake in a sub-fund," he says.
For example, Sisu has made three people principals in a distressed-debt fund it launched 18 months ago. While payouts are unlikely to be immediate, the move makes long term sense: Sisu's staff might earn generous payouts even after the banking cycle has turned.