The average hedge fund portfolio manager will take home just shy of $1 million in 2017, according to Institutional Investor’s inaugural All-America Buy Side Compensation report.
This figure includes the average base pay of $277,268, plus $686,757 in variable compensation, including bonuses, commission, and options. Around 800 portfolio managers and research analysts at hedge funds, investment advisory firms, and mutual funds managing U.S. equities self-reported their current income and what they expect to earn over the next 24 months for the survey.
At hedge funds, research analysts reported a total average income of $710,810, including $201,179 in salary. Those with dual roles as portfolio managers and research analysts were the highest earners, with average pay packages totaling $1.45 million, including $1.23 million in variable pay. Hedge funds have been on the rebound in 2017, after industry-wide losses in 2015 and high-profile divestments. Net outflows in 2016 totaled $70.2 billion, according to data provider HFR, and investors continued to pull capital through the first quarter of 2017.
But as of this October, hedge funds had posted twelve straight months of positive returns, net of fees, with HFR’s composite index delivering 7.2 percent for the year. Money has begun to flow back into the industry, with total assets under management predicted to reach $3.15 trillion by the end of the year, according to HFR.
[II Deep Dive: Hedge Funds Performing Their Best Since 2009]
Of the portfolio managers surveyed by II, nearly three-quarters said they expected their pay to rise by more than 10 percent over the next two years, with just over a quarter predicting a 50-plus percent raise. Meanwhile, fewer than 5 percent of portfolio managers thought their compensation would fall by more than 5 percent.
Hedge fund analysts and analysts-cum-portfolio managers made similar projections about compensation: Roughly 3 percent of analysts and 7 percent of dual-roled managers expected their income to go down by more than 5 percent, while around three-quarters of both groups predicted pay would increase by 10 percent or more.
Portfolio managers at mutual funds and wealth managers were less optimistic about salary increases, with the majority expecting their compensation to either stay roughly the same, or increase by less than 25 percent. On average, mutual fund portfolio managers earned $938,956 in total compensation — only slightly below their hedge fund counterparts — while those at investment advisory firms made $527,163.
The full All-America Buy Side Compensation report includes average base and variable compensation broken down by assets under management across hedge funds, mutual funds, and wealth managers.