Compensation for hedge fund employees declined in 2011 in the wake of volatile markets, with portfolio managers and senior traders taking the biggest overall cuts in pay, a Glocap survey shows.
Mid-level and junior hedge fund professionals saw their average pay range between a seven percent increase and a 10 percent decline, the survey said.
Meanwhile senior level hedge fund workers, who are armed with a greater ability to influence fund performance and take home more incentive-based income, fared much worse with pay levels ranging from flat to declines as steep as 30 percent. Weak performance was the main reason for the widespread declines in pay that were seen across the industry, Glocap Chief Executive Adam Zoia said in a statement.
The survey noted that hedge funds were riding high up until a disastrous third-quarter. For the first two quarters of 2011, the industry surpassed record levels of total capital under management, reaching $2.04 trillion before a sharp plunge in the third-quarter, Glocap noted.
According to the HFRI Fund Weighted Composite index, hedge funds declined in value by 6.2 percent during the quarter, which was marked by widespread market volatility as political wrangling in the U.S. over its debt ceiling played out, while the European debt crisis worsened.
"Performance suffered which was the primary reason overall compensation fell," Zoia said. "However for junior level analytical talent, compliance and marketing professionals, compensation was largely shielded from any decline and in some of those roles increases were recorded."
The survey added that hedge fund marketing, client service, accounting and compliance employees saw their pay either remain flat from a year ago, or rise modestly. As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio