After taking a nosedive in 2008, hedge fund compensation at U.S. funds has begun to inch up again, according to a new survey from Glocap Search and HedgeWorld.
Total compensation, including salaries and bonuses, moved up by 7 percent in 2009 for middle- and bottom-performing funds, and by 2 percent at top performing funds. This pales in comparison to the 17 percent drop in total compensation for bottom- and middle-performing funds and 7 percent drop at top performing funds in 2008, but it’s a step in the right direction.
According to the Glocap survey, mean total compensation peaked in 2007, and ranged from $551,000 for bottom-performing funds to $931,000 for top-performing funds. Of that peak, roughly two-thirds of compensation came in the form of bonuses. Employees at top-performing funds typically earn a greater percentage of their total compensation from bonuses, while base salaries average about the same, $220,000, for both groups.
Hedge fund job hiring is picking up as well, according to Glocap, which reports a “flood” of new search activity.
In another sign the economy has turned a corner, the number of new hedge funds launched is growing in size and volume, reports The Financial Times. Citing data from Chicago-based Hedge Fund Research, the article notes that new fund launches rose to 182 for the second quarter of 2009, up from 148 in the previous quarter. However, the sum total of all new assets raised by hedge funds in Europe still do not match the $2.5 billion raised by a single fund, Brevan Howard’s Strategy Fund, in 2008.
The pace of start-ups is an important measure of industry health, building on the uptick in performance and investor inflows that have also picked up this year.
In a related story, legendary hedge fund manager Julian Robertson, along with Emil Henry Jr., are planning to launch a private equity firm to invest in North American and European infrastructure.
As you may know, Robertson founded Tiger Management LLC in 1980 and turned it into one of the world’s largest hedge funds, until closing the fund in 2000. Emil Henry was previously global head of infrastructure at Lehman Brothers Holdings Inc. in New York.
Their new Tiger Infrastructure Partners LP will invest in energy, water and transportation, reports Bloomberg.
High frequency traders are highly sought after according to a story in Advanced Trading, which notes that proprietary trading firms are poaching people with quantitative experience away from exchanges and bulge bracket firms.
Proprietary trading firms are hungry for proven talent and can dangle big upside carrots in front of those who make the switch, given that bonuses at hedge funds are often tied to individual P&L, rather than the performance of the entire firm.
The article notes that automated trading continues to dominate the markets. So much so that several top Wall Street execs are leaving jobs at major firms to take senior roles at newly-formed high frequency trading firms. This reflects a belief, even among traditional Wall Street types, that “black-box” trading represents the future of the markets.
It also means an increasing demand for hedge fund jobs for those with experience in high frequency trading. Candidates coveted by high frequency trading firms have backgrounds in technology and quantitative trading. Many have experience building electronic trading systems for equity markets. They can build a system, understand how to make it work fast and develop models and strategies for execution, according to Joe Long, executive recruiter at I-NET Technologies, a New York-based recruiting firm.
