Bonuses paid to professionals in the traditional asset management industry at the end of 2023 are expected to be flat year over year, according to a report issued Monday by Johnson Associates, a compensation consulting firm.
Specifically, bonuses for traditional managers are expected to range from a 5% decline to a 5% increase compared with last year.
The generally unchanged bonus payments will occur despite surging equity markets as investors shift from active products to passive lower-fee products resulting in lower revenues, Johnson said in the report.
These traditional asset management firms are also expected to witness moderate headcount reductions and a slowdown in hiring as companies seek to trim costs to mitigate margin impact.
Meanwhile, year-end bonuses issued to hedge fund professionals are expected to range from flat to a 5% payment increase, while bonuses paid at private equity firms are projected to be flat over the prior year at both mid to large and mega-sized funds.
Hedge funds have seen moderate inflows led by the largest funds. Market appreciation will boost equity funds, but performance at macro funds will fall from a strong year in 2022, the report said.
Private equity funds are facing a difficult fundraising environment, with dealmaking and exits in decline. Fundraising at venture capital funds are "dramatically" down, while traditional buyout activity is strained by higher borrowing costs, the report added.