How much do portfolio managers make at hedge funds?
Compensation spans a huge range at this level because it's linked almost 100% to performance. We gave a range of $500K to $3 million USD in the hedge fund career path article for the “average” PM, with median pay in the high-six-figure-to-low-seven-figure range. But there are several important footnotes and caveats.
Hedge fund managers typically earn above-average compensation, often from a two-and-twenty fee structure. Hedge fund managers typically specialize in a particular investment strategy that they then use to power their fund portfolio's mandate for profits.
Who Is the Richest Hedge Fund Manager? Ken Griffin of Citadel is both the richest hedge fund manager and the highest paid. In 2022, he earned $41. billion, and by the beginning of 2023 his net worth was estimated at $35 billion.
| Job Title | Annual Salary | Monthly Pay |
|---|---|---|
| Cto Hedge Fund | $166,511 | $13,875 |
| Data Scientist Hedge Fund | $165,018 | $13,751 |
| Cfo Hedge Fund | $157,532 | $13,127 |
| Fund Controller | $154,999 | $12,916 |
The 2% flat rate charged on total assets under management (AUM) is used to pay staff salaries, administrative and office expenses, and other operational expenses. The 20% performance fee is used to reward the hedge fund's key executives and portfolio managers.
While the average manager's pay has been pegged by researchers at about $1.74 million, the broader context is a field marked by significant income disparities and driven by performance and fund success, with relatively few earners pulling in a good deal of the overall pay in this sector.
Hedge funds make money by charging a management fee and a percentage of profits. The typical fee structure is 2 and 20, meaning a 2% fee on assets under management and 20% of profits, sometimes above a high water mark. For example, let's say a hedge fund manages $1 billion in assets. It will earn $20 million in fees.
Long hours, intense competition, divorce, stress, and even substance abuse – these are some of the issues that can typically affect portfolio managers.
A Day in the Life of a Portfolio Manager
A portfolio manager directs all of the trades the investment fund or portfolio makes during the day by making final decisions on the securities involved. They also meet with analysts who have conducted research on various securities and the institutions that issued them.
The median yearly total compensation reported at Citadel for the Project Manager role in United States is $241,738.
Can you make millions at a hedge fund?
The money is a big draw as well: if you're at the right fund and you perform well, you can earn into the mid-six-figures, up to $1 million+, even as a junior-level employee. The top individual Portfolio Managers can earn hundreds of millions or billions each year.
Successful hedge fund managers routinely pocket millions of dollars in total compensation, with the top fund managers earning paychecks in the billions of US dollars[1]. This doesn't include how much they personally stand to benefit from their own investments in the funds they manage.
As of Feb 20, 2024, the average annual pay for a Vice President Of Hedge Funds in the United States is $157,532 a year. Just in case you need a simple salary calculator, that works out to be approximately $75.74 an hour. This is the equivalent of $3,029/week or $13,127/month.
$211K (Median Total Pay)
The average Portfolio Manager base salary at Citadel is $159K per year. The average additional pay is $52K per year, which could include cash bonus, stock, commission, profit sharing or tips.
Many PMs work around 60 hours per week (or more), but they're “on call” all the time because the markets are always moving, and potential crises are always waiting.
Steps to Become a Portfolio Manager. Portfolio management is a leadership-level role that requires over five years of experience as a finance analyst or associate and extensive knowledge of finance and investment trends.
Key Takeaways
The average annual base salary for a portfolio manager in the U.S., as of December 2023, was $128,350, according to Glassdoor. Portfolio managers must meet with clients at least annually to review investment objectives and asset allocations.
Buffett is one of the few billionaires who amassed a fortune by building a successful business and managing a stock portfolio simultaneously.
Senior portfolio managers often report directly to a chief investment officer (CIO), which makes portfolio management a potential career path to an executive position in an organization, whether as a CIO or a similar executive function with higher-level responsibility for the investment process.
They were his partners, not his clients, and it was having their backing that enabled him to act with the confidence and boldness that has defined his long career. The bottom line: There is no Warren Buffett Hedge Fund because while he is an implacable acquirer, Buffett doesn't think like a hedge fund manager.
Is it stressful to be a hedge fund manager?
Hedge fund managers can experience high levels of stress due to the pressure of managing large amounts of money and making complex investment decisions in a rapidly changing market environment. They are responsible for generating returns for their investors, who often have high expectations for performance.
Working for a hedge fund can be a rewarding and lucrative career path for those with certain skills and qualities. These skills typically include a strong understanding of the financial markets, financial analysis, and risk management.
Portfolio managers need at least a bachelor's degree, and sometimes they need a master's degree. They should also complete several years of experience as an analyst in the finance industry. Usually, hiring managers look for professional certifications as well.
Highest salary that a Portfolio Manager can earn is ₹35.0 Lakhs per year (₹2.9L per month). How does Portfolio Manager Salary in India change with experience? An Entry Level Portfolio Manager with less than three years of experience earns an average salary of ₹6.7 Lakhs per year.
Other Portfolio Manager Qualifications
The most prominent certification in the field and in demand by employers is the Chartered Financial Analyst (CFA) designation awarded by the CFA Institute. This designation is open to any financial analyst who has a bachelor's degree and four years of acceptable work experience.
