Hedge funds are known for pulling in the big bucks, and with that comes compensation. Lots of it.
However, according to data from the online investor network SumZero, the majority of hedge fund analysts don't actually make more than other professionals in traditionally well-paid jobs. SumZero used numbers from 2,500 entries in its compensation database to evaluate what pay to expect at a hedge fund.
SumZero COO Nicholas Kapur said most compensation reports relied on using averages to draw conclusions, which makes them susceptible to being skewed by extreme outliers. To correct for these, SumZero based its report off the median of compensation reported instead.
Here's a graph of plot points SumZero has collected.
At the very beginning of analysts' careers, their pay is mostly clumped together, ranging from $72,500 to $190,000 for the first year. Then as the timeline progresses, the discrepancy between lowest- and highest-paid employees widens considerably, ranging from $225,000 to $700,000.
"What you see here is that (1) yes, individuals are quite well-paid in the middle quartiles as you might expect, but (2) they're not paid at levels that are out of scope given their levels of advanced education/experience," Kapur wrote in an email."In fact, these are salary ranges that are not uncommon for doctors, dentists, lawyers, engineers, etc. at comparable points in their careers."
Here's another graph that shows the extreme growth rate only experienced by the 99th percentile, compared with those of everyone else.
So according to SumZero, though hedge fund pay is still high, it can become misleading or sensationalized thanks to the extremes of compensation that very few people actually earn.
Then what can you expect to earn at a hedge fund, if you're not going to be raking in billions?
Here are SumZero's charts on the median base pay and bonuses based on the size of your fund:
And the fund's location:
The asset class it invests in:
And finally (not just for hedge fund people) by the kind of fund:
Here's a link to the full report at SumZero >>