Cashing in and cashing out?

A spate of hedge fund IPOs and acquisitions by investment banks mean hedge fund proprietors are making more money than ever.

Earlier this month, four deals were announced totalling close to $1bn, according to the Financial Times.

While those at the top have made mega-bucks from the sales, traders' pay packages aren't necessarily affected, says Ben Dear, a director at search firm Mantis Partners.

Dear says a successful hedge fund trader can earn up to US$6m (3.1m), while a fund owner could bring home as much as US$30m annually. Some may be doing even better than this - Hugh Willis and Mark Poole, the two founders of BlueBay Asset Management, reportedly made 30m a piece when the company floated last week. Another 100 staff at the company are said to have shared 191m.

The acquisitions trend has been good news for prop traders at investment banks, who've seen their salaries rise in line with those at hedge funds. "Lots of them have renegotiated their pay structures," says Dear.

Whether the exalted payouts can continue is another matter. The spate of hedge fund sales may suggest that canny hedge fund managers know something the rest of us don't. Dow Jones, for example, is said to be in talks to launch an index tracker which will mimic hedge fund strategies (and performance) at a fraction of the cost.

If the strategy succeeds, those who sold out now may end up looking very prescient, as well as rich.