New York (HedgeCo.Net) – With the industry reaching a new high of $2.82 trillion in assets and net inflows at their highest level since 2007, the industry finds itself in tight competition for talent against other industries, as well as other hedge funds, for top finance professionals.
Compensation increased 5-10 percent over 2013 compensation, according to the 2015 Glocap Hedge Fund Compensation Report, with front office roles including Portfolio Managers, Traders and Senior Analysts seeing increases, as well as professionals in Marketing and IT at top performing funds.
Compensation growth trends showed not only a continuation, but an acceleration of trends observed in 2013, including greater transparency and use of deferred compensation. Firms placed a premium on individuals across all roles, including those in operational and risk groups, which are able to operate as client-facing resources. As a result of competition from other hedge funds, as well as industries including private equity, venture capital, and other financial services, new trends for qualified candidates include shorter evaluation timeframes, earlier involvement of more senior management personnel from the hiring firm and a greater likelihood of receiving offers from multiple firms.
“While hiring in recent years has been more opportunistic, there has been a greater urgency in 2014 to filling key roles at hedge funds; the time from introduction to a candidate starting has decreased from 6 months to 3 months. Examples are increasing of hiring in just a few weeks, especially when someone has left a fund that is folding, or when there are multiple funds chasing the same candidate,” noted Keizner.
In addition to fund performance being the primary determinant of hedge fund compensation, firm compensation models also consider an increasingly broad and complex continuum of qualities, designed to reflect increased teamwork, risk-based capital returns, firm promotion, extending duration of incentives and scrutiny from both regulators and investors of compensation practices.
“Hedge fund compensation structures continued to evolve in 2014 as industry capital reached record levels, balancing competing pressures for talented finance professionals from other industries against increased pressure for lower fees and long-term performance-based compensation packages,” stated Kenneth J. Heinz, President of HFR. “The continued emphasis on performance generation, as well as increased emphasis of teamwork, firm profitability and the decreased use of large guaranteed compensation packages, has contributed to a greater alignment of interest which properly incentivizes employees to expand their firms in a responsible manner.”
Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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