Hedge funds have a reputation for paying huge sums, particularly in locations like London and New York, but what about Hong Kong? It is, after all, the biggest centre for hedge funds in Asia, even if it remains comparatively tiny to Western markets.
Pay is also still lagging Western markets. While portfolio managers in the U.S. have the potential to earn up to $1.2m in bonus alone, hedge funds in Hong Kong rarely pay seven figures. Base salaries, meanwhile, still lag investment banks, according to Laikee Tang, a Hong Kong-based director and head of front office at search firm GRMSearch.
It’s also decidedly more opaque than pay in Western markets. Experts we spoke to suggested that investment analysts (or idea generators) tend to earn US$120-350k as a base salary – the range dependent on assets under management and historical performance of the firm – and 100-300% as a bonus, suggests Will Tan, a managing director at search firm Principle Partners. This means a maximum of $1.05m as a bonus, but headhunters suggest that this is still rare.
Portfolio managers, meanwhile, earn $150-500k, suggest recruiters. Bonuses are more difficult to define. Rather than a multiple of salary, portfolio managers instead earn a percentage of the performance they bring in. It’s also tied to assets under management, with larger funds tending to pay more.
The relatively lowly execution traders sometimes don’t receive a bonus at all, say headhunters, but still earn a good salary of $200-300k, or around two thirds the level of an analyst in terms of total compensation.
Bonuses in Hong Kong hedge funds depend on “asset under management (AUM), the generosity of the partners, and the performance of the firm,” suggests Rick Johannessen, a partner at the executive search firm Wellesley Partners, who also specializes in hedge funds.
Hiring has stalled
Asian hedge funds were a bright spot in 2014, but so far they haven’t fared well this year. This is largely due to the stock market slump in the summer, during which many hedge funds in Hong Kong took a big hit. “The hiring has slowed down,” says Tan, “Funds have been really cautious.”
Another reason is that most of the funds did much of the hiring at the first half of the year, when China’s stock market was rising rapidly, according to Johannessen. Many firms have built up their China team anyway, he says.
Looking ahead to 2016, the most sought-after posts would mostly be junior roles. “There are two types of openings. One is a PM who has a history of generating alpha,” says Johannessen, “The other is more junior analyst with some experience who could come in and give investment recommendations to existing PMs.”
“Given the high market volatility, I expect to see a higher demand in more structured credit and special situations focused hedge funds,” says Tang.
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