Hedge funds have long had a reputation as the place Wall Street stars go to earn even more than they can at an investment bank. Yet in a recent survey, three in five hedge fund employees said they aren't satisfied with their compensation. And that discontent is concentrated among front-office professionals, especially research analysts.
Less than 20 percent of analysts polled for Hedge Fund Job Search Digest's annual compensation report were happy with their salaries, according to a summary published in Hedge Funds Review. This could be a highly mobile group after the New Year, especially if their bonus expectations aren't met.
On the other side of the coin, back-office workers reported the most satisfaction with their pay, but had little hope for growth. That's probably because accounting, IT, and administrative staff in hedge funds - while making far less than investment pros who run the funds - are paid much better than their counterparts who work outside the fund industry.
Other Survey Findings Conflict
Salaries for all hedge fund employees in the survey averaged almost $300,000, with 7 percent of the group anticipating more than $1 milllion. More than one in four expected a pay increase of at least 15 percent this year. Nine percent expected to make at least twice as much as last year.
An interesting tidbit: "Pay was not necessarily linked to performance, according to the survey, which found a number of managers and employees expected salary increases despite their funds posting negative returns."
Earlier surveys of hedge fund compensation for 2009 produced conflicting estimates. Citing strong returns across most fund strategies, Glocap Search and HedgeWorld forecast year-end payouts for investment professionals in hedge funds will climb between 3 percent and 12 percent. But Johnson Associates, a compensation consulting firm with ties to Wall Street banks, projects the average hedge fund bonus for 2009 will shrink 15 - 20 percent this year after a double-digit decline in 2008. Johnson acknowledges that downward pay trend "may not align with expectations" - a recipe for high turnover among fund employees disappointed with their amounts.