Hedge Funds Tops Again In Greenwich Credit Player Comp Survey

For the third year in a row, hedge fund managers have no competition when it comes to total compensation, taking home, on average, $1.05 million per year, according to Greenwich Associates' annual study of U.S. fixed-income participants. Hedge fund managers saw about an $11,428 increase in salary and about a $98,068 increase in their annual bonus from 2004 to 2005. "I'm not surprised," said Tim Sangston, a managing director at Greenwich. "If you pick up the newspaper and read about the amount of money these professionals are making, it's pretty staggering."

Overall, U.S. fixed-income managers saw an average salary increase of 7% to $166,000 in 2005; bonuses rose 15% for an average payout of $277,000. As a result, total cash compensation for fixed-income investors increased 12% to $444,000 annually. Not surprisingly, the survey cites that employee satisfaction levels with their firm's compensation, philosophy and structure were higher at hedge funds than any other type of institution. Research analysts and assistant treasurers were the least satisfied with their $66,455 and $29,460 bonuses, respectively. "That's why people become hedge fund managers," Sangston said. "If you're good at it, you can make a lot of money. There has been a drain from traditional money managers to hedge funds ­ [large total compensation] is the end goal."

Portfolio managers at investment management companies and corporate pension funds hit it big with a jump in total compensation of about $77,852 to $515,586, ranking second behind hedge funds. Total compensation for bank portfolio managers was up about $11,003 to $333,406. "There's probably a little bit of bias in the numbers," Sangston said. "If someone didn't have a good year, they are probably less likely to provide their information."

Head traders at hedge funds saw the largest increase in annual bonuses, up $185,230 to $431,063 annually ­ but total compensation, at $602,938, still trails hedge fund portfolio managers. Head traders at banks saw total compensation increase about $44,292 to $530,861. Total compensation for head traders at investment managers and corporate pension funds rose $56,824 to $636,084.

Greenwich conducted 1,281 interviews with chief investment officers, cfos, ceos, treasurers, assistant treasurers, portfolio managers, research analysts, head traders and traders between February and April. The average tenure for surveyed U.S. fixed-income investors was 8.8 years, with 23% having between two and five years experience, and 20% with more than 10 years experience.