2013 Hedge Fund Compensation Report finds that smaller funds outperformed their larger counterparts in 2012.
According to HedgeFundCompensationReport.com, industry professionals expected increases in both base salary and year-end bonuses. The average reported cash compensation for 2012 was $314,000 and, again this year, bonuses played a big role in the paychecks of these professionals.
In 2012, when it came to fund size, bigger was not necessarily better. The size of the most recent fund raised in the typical firm represented in this year’s Report is less than $1 billion. “Despite reports of significant amounts of capital moving to large funds, it seems these small funds are outperforming the market,” said David Kochanek, Publisher of the Report.
Nearly three quarters of respondents reported positive returns for their funds in 2012. Last year, 16 percent of hedge fund professionals reported double-digit positive returns for their fund. This year that number jumped significantly to 30 percent. The number expecting their funds to be down 10 percent or less dropped from 22 percent to only 8 percent this year and only 2 percent reported negative fund performance in the double digits.
Great fund performance results in significant bonuses as well and double digit pay increases nearly across the board. Average cash compensation was up 15 percent over last year. Base compensation increased only 4 percent; however, bonuses jumped 31 percent as a result of the solid performance turned in by these funds.
The annual industry report is based on data collected directly from hundreds of hedge fund managers and employees, both large and small. The Report has grown to become the most comprehensive benchmark for hedge fund compensation practices in the industry and can downloaded instantly at HedgeFundCompensationReport.com
Respondents participating over the years represent a good cross section of the industry including small firms as well as some of the most recognized hedge fund firms, including: Apollo Global Management, Bank of America Merrill Lynch, Barclays, Blackwater Capital, Citi, Deutsche Bank, Gottex Fund Management, HSBC, JP Morgan Chase & Co., Man Investments, RBC, Silver Point Capital, UBP Asset Management, UBS and Wells Fargo Alternative Strategies.