With market appreciation and positive inflows boosting assets under management for traditional money managers and hedge funds thus far in 2014, industrywide incentive compensation is expected to rise, said a new report by Greenwich Associates and Johnson Associates.
The report projects that, on average, incentive compensation at traditional money management firms will increase between 5% and 10% in 2014, with incentives for equity strategies outpacing those for fixed income. Salaries are projected to increase 3% to 3.5%, including merit and promotional pay.
Incentive compensation among hedge funds, meanwhile, will vary much more widely, reflecting performance volatility from strategy to strategy and firm to firm.
Employees at underperforming hedge funds can expect to see incentive compensation that is flat to down 5%, while incentives at better performers are projected to increase by up to 5% and perhaps higher for top performers on average.