The hedge fund industry continues to be a lucrative business, as compensation for all titles and jobs across the board continues to increase, according to a report, “2008 Hedge Fund Compensation.”
The report, published by Glocap Search, Institutional Investor News and Lipper HedgeWorld, analyzed base salaries and bonuses of thousands of hedge fund professionals at hundreds of U.S. hedge fund firms from 2004 to 2007.
The average total compensation for investment professionals with one to four years of experience is $330,000, when working at funds with $1 billion to $3 billion in assets under management. The compensation rose 6% from last year.
For professionals with over 10 years of experience experience, they are expected to earn an average of $2.35 million this year, if they are working at firms with $10 billion or more in assets under management. The data tracked was a new category for the report this year.
Adam Zoia, managing partner at Glocap, noted that as hedge funds continue to attract capital at high rates and the markets become more competitive, there has been a heightened need for more qualified professionals to help invest the money, and the demand has pushed compensation higher.
Regarding bonuses this year, the report estimates that 2007 cash bonuses for investment professionals will increase anywhere from 1% to 9% over 2006 levels, which is significantly lower than what the authors of the report were predicting before the credit crunch concerns of the past few months.