Hedge fund payouts are expected to remain strong

Wed Dec 5, 2007



While this year's subprime and structured finance meltdowns have negatively affected bonus prospects at some hedge funds, the broader trends toward enormous inflows of capital and higher returns overall bode well for hedge fund employee compensation at yearend and in 2008.

"Those two factors are driving a very good year," says Alan Johnson, managing director of New York compensation specialist Johnson Associates.

During the first half of 2007, the assets of 246 U.S. hedge fund firms managing $1 billion or more increased by more than 23%, to nearly $1.5 trillion, according to the Absolute Return Billion Dollar Club. Most of this money has gone to the largest firms, and the trend shows little sign of abating. And despite negative returns in July and August, the Absolute Return Composite Index advanced 9.19% for the year through October. That puts the Index well ahead of its 8.54% return for the same period...

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