The 2009 Hedge Fund Compensation Report

04-21-2009 | Source: Institutional Investor News

The past 12-18 months have been a notable period for the hedge fund industry with the credit crisis causing the downfall of more than one fund and affecting performance at many others. Despite any negativity surrounding the industry, we can attest to the fact that funds are still hiring and competition has been strong for top candidates.

This year’s Hedge Fund Compensation Report is once again brought to you by partners Glocap Search LLC, Institutional Investor News and HedgeWorld.To better reflect how performance and fund size affect compensation we have revamped how the data is presented. Rather than separating data for each professional by years of experience and then by fund performance and fund size as we have in the past, in the 2009 Report we have combined the three factors.

This change was made based on feedback we got from past purchasers and we agree that segmenting the data this way provides an easier way for funds to compare their compensation to their peers. For example, in the new format, if you are at a top performing fund that has $2 billion in AUM and are looking to hire someone with 5-9 years of experience there is a single chart that combines all three factors.

We have also added compensation data for two new categories of professionals—those with 1-2 years and 3-4 years of experience. The new 1-2 year category is designed to give guidance for funds that tap the investment banking analyst programs for junior level support, while the 2-4 year category will assist those funds seeking to hire analysts with banking and some buy-side experience.

To better reflect the current state of the hedge fund market, we have also slightly altered the ranges for some of the fund size categories. The two smallest categories are now $0-500 million and $500 million to $3 billion. Finally, we have also expanded our analysis on hiring trends, P&L compensation structures and deferred compensation while also adding more detailed data for non-investment, or infrastructure professionals, a growing group at many funds.

As we have done in the past, this year’s Report includes estimates for projected bonus (and thus total compensation) for the current year—in this case 2008.We do this because readers of the report consistently ask for any clues we have on bonuses as a means to more comprehensively benchmark future compensation.We have arrived at these estimates based on some select placements Glocap has made (with guaranteed bonuses), as well as Glocap recruiters’ knowledge of compensation trends and informal surveys with hedge fund human resources and investment professionals.

While our research leads us to believe that these estimates are close to actual levels, we feel compelled to once again point out that we do this with some trepidation because at the time we are publishing this report there are still four months left in 2008 and, as we all know, a lot can happen in even such a short time period.

For more information and to order the 2009 Hedge Fund Compensation Report please click here.