Hedge fund professionals are tightening their (expensive leather) belts in anticipation of lower bonuses — and hence, lower total compensation — in 2016.
The average expected total compensation for all hedge fund investment personnel is expected to drop 8.7% to $522,000, compared to 2015, the results of an online survey of more than 500 hedge fund investment managers conducted in September by Odyssey Search Partners showed. Bonuses, on average, will be down 13.6% to $349,000 and base salaries will be up an average of 3% to $173,000.
The most senior employee level — portfolio managers — expect their 2016 total compensation to fall a whopping 34.4% on average to $704,000, with a bonus decline of 44.4% and a 5.6% increase in base pay, compared to the prior year.
Survey respondents at senior analyst or portfolio manager with seven or more years of experience said they expect an average decline in total compensation of 13.5%, with their 2016 bonus down 19.7% to $473,000 and their base salary down 4.4% to $212,000.
Junior analysts are much more upbeat about their comp packages. Those young analysts with three years or less of experience expect total compensation to rise 9.9% to $321,000 this year. Their average bonus expectation is an 11.6% jump to $183,000 and an increase in base salary of 7.8% to $138,000.
Odyssey's survey also found that at all seniority levels, hedge fund employees' bonus expectations are closely tied to their firm's ability throughout 2016 to bring in new net inflows.