Hedge fund pay explained in one helpful chart
If you want a portfolio management job in a hedge fund, you might be wondering what your pay will look like when you get one. Helpfully, therefore, Barclays has produced the following chart.
When you work in a hedge fund, you'll either paid according to your net P&L, or to the percentage of performance fees earned on your P&L. This will then be altered according to the amount of capital allocated to you. The resulting metric will then be multiplied by your gross returns above a pre-specified level (the hurdle rate). After that, the fund will deduct all the costs associated with your performance. You, the portfolio manager, will get to keep whatever's left.