Here’s what we learned in 2014 — it doesn’t matter how well hedge funds do, employees will still be incredibly well paid.
According to the 2015 Hedge Fund Compensation report, employees got a boost to both their base pay and bonuses, with average cash compensation reported around $US368,000. Base salary grew by the single digits while bonuses grew in the double digits.
“Again this year, solid fund performance results in significant bonuses,” said David Kochanek, Publisher of HedgeFundCompensationReport.com. “The difference this year is we saw a reduction in the correlation between fund performance and bonus levels.”
What Kochanek is saying is that the average hedge fund didn’t do so hot in 2014. For the sixth year in a row most funds failed to beat the S&P 500, returning just 2% — that’s the worst return since 2011, according to Bloomberg.
As a result, a lot of funds are shutting down. Europe’s massive Brevan Howard shut down a fund last month. And even legendary trader Paul Tudor Jones shut down his first fund, the Tudor Futures Fund, in order to focus resources on his flagship the BVI Global Fund.
So times aren’t nearly as good as the money.
The problem here is that this kind of flies in the face of Wall Street’s whole “eat what you kill” mantra… doesn’t it?
Sounds like it’s time for a new mantra. Leave suggestions in the comments.