Typically a hedge fund will be compensated 1 and 20, which means 1% of total assets annually is taken for general expenses (office rentals, secretaries, etc.) and 20% of total Profits generated goes into the pockets of the hedge fund, to be distributed as they see fit, normally with the manager(s) of the fund taking the lion's share.
The 20% figure is starting to become a lowball amount, the more established hedge funds are typically in the range of 25% all the way up to 50% of total profits.
Here is a real world example. I have a friend who is a hedge fund manager in NYC. He has been running his fund for about 6 years now, and had 200 million in assets starting 2001. 1% is immediately taken off the top for general expenses, office space, analysts, etc. His fund was +44% in 2001, before the fund got their slice of the pie. 33% of total profits generated flow to the fund. So, a total of 88 M was made by the fund .. so the hedge fund's cut of the profits was just over 29 million. The two partners/head traders received a small salary, but a bonus of 10 million each, and the rest of the 9 million was divided amongst analysts, traders, etc.
I would guess the average fund size is 75 - 175 million US. Even a fund that is mildly successful can make some very nice bank, depending on their profit splitting. Taking job postings from Monster.com to try and surmise Auric's earning power is unrealistic. Any decent hedge fund ain't advertising on Monster.com to find their manager, that's for sure. |
