Bonuses at hedge funds still rising

Click to follow
The Independent Online

Hedge fund managers can expect a jump in their year-end bonuses despite the recent market ructions that have led to several high-profile blow-ups in the sector.

The most senior hedge fund investors will pocket an average of $2.35m this year, according to a compensation report from the recruiters Glocap.

Adam Zoia, the report's author, said the rise – for managers with at least a decade of experience and who oversee at least $10bn – represents an increase of about 6 to 7 per cent on 2006, itself a record year.

The recent chaos means that what was set to bean unbelievably good year for hedge fund managers will only turn out to befantastic.

"If you had asked us in June, we would have predicted increases of 20 per cent. That was before July and August," Mr Zoia said.

The expected jump in compensation is due to the rapid growth of the industry. The hedge fund industry has more than doubled the money it manages to $1.2 trillion in the past five years, according to Lipper. That expansion means that the demand for qualified investors and analysts far outstrips the supply, pushing prices for people upward whether performance falls or not.

Since 2002, hedge fund managers have seen their average pay rise by 40 to 50 per cent, Mr Zoia said.

Compensation comes in the form of a management fee of typically between 1 and 2 per cent of the funds under management, plus 20 per cent cut of any profits the fund generates on the year.