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"There have been a lot of reports about hedge fund compensation
being down this year but that is misleading," said Adam Zoia,
chief executive officer of Glocap, the largest investment
management search firm which tracks hiring and pay in the hedge
fund industry. "The headline here is that pay is up for star
performers this year."
And the jump is expected to be large, according to the 2017
Glocap Hedge Fund Compensation Report which was reviewed by
Reuters.
At top performing funds, investment managers' bonuses are on
track to be up as much as 11 percent. Portfolio managers at
poorly performing funds will see bonuses shrink by as much as 7
percent, the report said.
Hedge funds became famous more than a decade ago for delivering
eye-popping returns, but more recently the industry as been
criticized for its high fees and low returns, prompting many
pension funds to pull money out.
Even as the average hedge fund is earning returns only in the
low single digits, portfolio managers at the best performing
funds are likely to earn 6.6 times more than those at the
industry laggards, the data from CompIQ show.
The strong jump in compensation is being fueled by a wider
spread between returns this year. The top performing one-third
of funds are boasting gains of roughly 15 percent. The bottom
one third are nursing average losses of 7 percent. A year ago
the top third was up only about 4.2 percent while the bottom
third was off about 4.2 percent.
"Last year there was a much tighter range," Zoia said.
Hedge funds have long paid extremely well with the 25 best-paid
hedge fund managers earning $13 billion last year, Institutional
Investor's Alpha's 15th annual ranking of the industry's
highest-earning managers show.
With more sluggish returns this year the conventional wisdom was
that pay would shrink at a time some firms have laid off staff
and trimmed spending on employees to save.
The data show this is not true. Since hedge funds charge a
management fee and take a portion of gains, analysts say there
is still enough to pay and that firms will have to pay up to
keep their best staff.
"The feeling in the industry is that it is hard enough to make
money, so if you make me money you will be very well taken care
of," Zoia said.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)
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