![]() |
||
Hedge Fund Manager CompensationDownload the FREE Guide to the Top Sources of Passive Income
Hedge fund manager compensation. What is the hedge fund manager salary? Here’s why it is outrageously high. Hedge Fund CompensationMutual funds typically only charge a management fee. However, hedge funds charge both a management fee and a performance incentive fee. The hedge fund analyst salary is thus usually higher. Management CompensationThe management fee is a fee based on the entire amount of assets being managed, and may go up to 2 percent. This is deducted from each trading day based on an annualized percentage. The management fee creates a potential conflict of interest, as the hedge fund manager may thus be more interested in acquiring more assets than in generating high portfolio returns. Performance Incentive CompensationThe performance incentive fee helps offset this conflict of interest, as hedge fund managers also charge another fee based on how well investments perform. This annual fee is typically set at 20 percent of profits. Additional safeguards in place to protect investors include the ‘high-water mark’ safeguard and the ‘hurdle rate’ safeguard. High-Water MarkWith the high-water mark condition, performance gains are calculated from the baseline of a previous high. Thus, hedge fund managers do not charge for merely recovering from previous losses; the hedge fund manager salary only increases with new profits gained. Hurdle RateWith this safeguard, performance incentives are only calculated if hedge funds manage to increase in value at a rate higher than a specified percentage benchmark, such as the LIBOR rate. If the fund performs below this hurdle rate, the hedge fund compensation performance incentive will not be charged. Hedge fund manager compensation has been under close scrutiny recently, as more and more people are concerned about hedge funds’ lack of transparency. There will likely be fuller disclosures of managerial compensations and hedge fund finances in the near future. ***C2_invitation_21464505*** Free Billion Dollar Income NewsletterSign up for the free Billion Dollar Newsletter. Filled with ideas and strategies on generating wealth, personal effectiveness, how to apply the law of attraction, how to make money online and more, this newsletter is a powerful way to start your week. Your email address will be kept confidential. Easily unsubscribe at any time. Sign up right here: Feel free to link to this page to share the information here
Return from Hedge Fund Manager Compensation to What are Hedge Funds |
Subscribe to this site for free, and get a Free Guide to the Best Sources of Passive IncomeSpecial OfferPurchase a text-link ad on this site (Alexa rank in top 0.5% of all sites) for only $9.99 a month - Advertising Options at Billion Dollar Income |
|
|
Copyright © 2008-2010 Billion Dollar Income.
By accessing and using this page, you agree to our Disclaimer, Privacy Policy and Terms of Use. |
||









