Hedge fund stars may see smaller paychecks after a brutal 2018. Here’s what you can expect to get paid.

Steve Cohen, founder of Point72 Point72
  • Senior hedge fund managers are taking home smaller paychecks in 2018.
  • Median compensation – including base and bonus – for senior analysts is expected to decline by 12%, while median pay for portfolio managers is projected to fall 15%.
  • Market volatility, particularly in October, hurt hedge funds this year.

This year was a brutal one for hedge funds – and it’s hitting portfolio managers’ bonuses as a result.

With hedge funds suffering from poor performance in 2018, investment managers are likely to to take home smaller paychecks, according to a new report.

“Hedge funds had a bad year,” said Adam Zoia, chief executive officer at compensation advisory firm CompIQ, which published the data. “Of course, the year is not over, but so far, it’s not good.”

Median compensation – including base and bonus – for senior analysts is expected to decline by as much as 12%, to $US572,000 in 2018. For portfolio managers, it is likely to fall to $US967,370, down 15% year-over-year, the report said.

Junior investment professionals and back office employees will be shielded from the volatility, Zoia said. The report predicts a 1% decrease in median pay for junior analysts.

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The hedge fund industry has historically been known for its eye-popping salaries, with managers such as Bridgewater Associates’ Ray Dalio and Appaloosa Management’s David Tepper among the world’s wealthiest.

But recently the industry has come under pressure from its own investors – called limited partners – for its high fees and subpar returns.

As of November 1, hedge funds across all strategies posted an annual return of -0.8%, according to CompIQ. That compares to a return of 11.4% in 2017, which was the highest level in four years.

The month of October, in particular, was the worst month for hedge funds since May 2010. The group lost almost 3%, according to Hedge Fund Research.

As a result of market turmoil smaller hedge funds might slash jobs by year-end, Zoia predicted.

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