Asset managers raking in big bucks again

On the back of stronger portfolio performance, U.S. asset managers are once again expected to bring home hefty compensation packages, according to a survey by Greenwich Associates and Johnson Associates.

The report breaks down the asset management industry into two categories: hedge funds and traditional management firms. From 2007 to 2008, both equity and fixed-income hedge fund managers saw their total compensation plummet about 40 per cent. Those in the fixed-income world started recovering these losses last year when bond markets started soaring, but equity mangers are just starting to see a rise in total compensation.

Of course, some realism is needed. After two rocky years, equity managers were still pulling in around $810,000 (U.S.) on average in 2009 and that figure is supposed to rise to $875,000 in 2010. Yet that is only about half of what they earned in the boom days of 2007, said Greenwich Associates’ director of institutional marketing Jennifer Litwin.

As for traditional management firms, the dip and recovery weren’t as pronounced. Fixed-income managers only saw about a 5 per cent decline from 2007 to 2008 and then had a big 50 per cent jump in 2009, much like their hedge fund peers. Average total compensation for these managers in 2010 is expected to come in around $525,000. As for equity managers, after a flat year in 2009, they are projected to pull in about $950,000 this year.

To get an idea of how this “total compensation” is paid out, the two consulting firms found that bonuses made up about 70 per cent of cash compensation for equity portfolio managers and about 55 per cent for fixed-income managers.

However, the industry is likely to see some of this compensation come in the form of long-term incentives over the next few years, the two consultants noted.