Hedge Fund Managers Top Investment Industry Pay Survey

by Phillip Morton, Investors Offshore.com

29 June 2005

A new survey of the United Kingdom's investment fund industry has found that hedge fund managers are paid on average 58% more than their peers in the mutual and pension fund industry.

According to the poll conducted by the CFA Institute in London and Russell Reynolds Associates, hedge fund managers were paid an average of $344,128 annually. This compared to an annual average salary of $217,048 for managers across all types of investment companies.

Among the top 10% of investment managers, hedge fund managers earned on average $1.5 million per year, compared to $647,185 for other investment managers.

The survey found that investment managers in the United Kingdom were better compensated than their counterparts in the United States, Germany and Japan. The average annual pay for UK investment staff has increased by 30% to average $167,586, the researchers discovered.

There was also a disparity in the pay stakes between men and women, with men earning on average $221,745, compared to the $182,148 earned annually by women in the investment industry.

One factor that contributes towards higher salaries for hedge fund managers is the fee structure for hedge funds. Typically, hedge funds will charge a 2% management fee and will take 20% of any investment profits.

However, the researchers predicted that the pay gap between hedge fund managers and the rest of the investment industry would soon begin to narrow.

"As hedge funds become more mainstream, salaries will return to the mean," noted John Barrass, European head of the CFA Institute, which awards professional qualifications to investment staff.

"They can't remain at those levels for ever," he added.

The adverse performance of hedge funds in the first five months of the year is also thought likely to affect pay for hedge fund managers this year.

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