Hedge fund managers in the U.S. can expect to see bigger bonuses, in time for Christmas, according to new research by Hedge Fund Research and the executive search firm, Glocap.
An article in the Financial Times notes that year-end bonuses are set to rise by 5 percent this year. It’s a sign that the hedge fund industry has bounced back to some extent from the hammering it received from 2008 to 2009. Hedge fund firms are once again rewarding their top performers, despite the hostile political and populist climate against U.S. financial professionals raking in huge bonuses and compensation.
It also contrasts with what’s going on in the investment banking sector, according to the Times. Goldman Sachs is reportedly slashing its average pay-out to employees by 26 percent, while average pay at JPMorgan fell by 8 percent.
According to the Glocap survey which polled thousands of U.S. hedge fund employees, a portfolio manager at a larger fund could take home, on average, something in the neighborhood of $4.85 million in annual compensation. Managers at smaller funds would take home less, naturally, but still more than their colleagues working at investment banks or in executive positions within corporations.
It all means that hedge funds have pulled themselves out of “crisis mode,” according to Adam Zoia, CEO for Glocap. And while hedge fund compensation hasn’t yet returned to pre-crash levels, there are signs that may just around the corner. The average hedge fund return is 4.69 percent for 2010, according to data from Hedge Fund Research. With continued steady gains, many funds will once again be above their “high water marks” and be able to charge performance fees again, which can range up to 20 percent of profits. That development could lead to even higher compensation levels for those in hedge fund jobs.
What’s your take? Do you think hedge fund performance and compensation is on a steady climb upward, from here? Add your comments below.