The average hedge fund portfolio manager in Europe earned $573,761 last year — a pay package many expect to near $900,000 by 2019.
Hedge fund portfolio managers surveyed for Institutional Investor's first edition of the All-Europe Buy-Side Compensation Report reported an average of $206,909 in base compensation for last year, plus $366,852 in bonus pay.
While these earnings fall far short of American hedge fund salaries, which averaged close to $1 million for portfolio managers, the vast majority of European portfolio managers expected their fortunes to improve over the next 24 months. Two-thirds of surveyed portfolio managers believed their total compensation would increase by at least 10 percent, while 48 percent expected to receive a raise above 50 percent. Just 5 percent said they thought pay would fall over the next two years.
[II Deep Dive: Here's What Hedge Fund Managers Will Earn This Year]
Last year marked a turnaround for the hedge fund industry, with managers posting their best annual performance since 2013, according to industry tracker HFR. The data firm's composite index gained 8.7 percent over the twelve-month period, with its index of Western European hedge funds returning 7 percent.
As performance improved, so did investor sentiment toward the industry: After six straight quarters of net redemptions, allocators began putting money back into hedge funds in the second quarter of last year.
Roughly 300 portfolio managers and research analysts at hedge funds, wealth managers, and mutual funds managing European equities were surveyed for the All-Europe Buy-Side Compensation Report. It should be noted that II only received responses from hedge fund portfolio managers at firms with less than $1 billion under management.
Hedge fund analyst respondents, meanwhile, came from firms with assets ranging from less than $500 million to as much as $40 billion. These analysts reported average total compensation of $365,620, including $142,943 in base pay.
Like their portfolio manager counterparts, hedge fund analysts were largely optimistic about future pay. Roughly 86 percent predicted their total compensation would improve by more than 10 percent over the next two years, with 34 percent expecting a pay increase of at least 50 percent. None felt that their earnings would fall by more than 5 percent.