Hedge fund managers are perceived to be among the highest-paid in the investment field. But for people in the know, the best in the industry commands a very steep price. The talents of this distinguished workforce are undeniable.
They are what you might call the financial ‘virtuosos.’ And together with high-net-worth individuals and corporate institutions, they build wealth.
How much does a hedge fund manager earn?
Many people are envious of the hedge fund manager and the salary they receive. However, their path to reaching the pinnacle of success is not without sacrifice. You have to prove your competence on a consistent basis. The job is a pressure cooker and those who can overcome deserve to be compensated handsomely.
The career follows a certain path and a specific timeline within each the expertise is acquired. The salaries are not generic and often dictated by the area or location. If you’re curious about the pay of hedge fund managers, here are the conservative estimates.
Typically, the junior trader earns the least being the lowest rung position in the team. Advancement to a higher role in the hedge fund firm is possible. It might take 4 years or more before one can assume the coveted hedge fund manager position.
The salary scale of hedge fund managers is posted by established recruitment agencies. Applicants can view the average base pay as well as the salary range from various sources online. Below is one of the platforms that show the estimates.
The data published by these headhunters are usually sourced from or provided by the holding the positions and working in hedge fund firms. If you carefully observe, the figures from both sources are nearly identical.
More or less, a junior trader can earn $51,000 in the beginning and expect improvement in pay as experience is gained. But it should be stressed that junior traders, senior portfolio managers, and the hedge fund managers can earn more than the amounts shown.
Performance and fee-based sharing arrangement
Since the earnings of hedge funds managers come from a fee-sharing arrangement, they work tirelessly to earn their keep. They trade or invest funds of other people’s money or accredited investors in exchange for fees or percentage of the profits.
A regular hedge fund firm would normally charge a 2% fee on the profits generated by the managed assets plus a pre-agreed performance fee. The performance fee variable and therefore could fatten the total earnings some more.
There is no argument as to the significant role of hedge fund managers in the organization. The task of bringing in the goods lies squarely on their shoulders. There are other backroom positions available in a hedge fund firm but they are cost-centers.
But as in any corporation, people working in profit centers are paid premiums. Hence, the prolific hedge fund managers deserve the generous income on top of the accolades