Asian hedge fund traders closing gap
Asia's hedge fund managers are impoverished (relatively) compared to their international counterparts, but the gap is closing...
While only one trader from ex-Japan Asia made Trader Monthly magazine's top 100 earning list for 2006 - Goldman Sach's Morgan Sze - the number is set to rocket.
Rumours suggest a number of hedge fund traders in Hong Kong earned between US$30m and US$50m last year, meaning any pay gap is narrowing.
"It is nonsense to suggest Asian hedge fund managers are really lagging their US and European peers," says Nick Lord, principal at Heidrick & Struggles in Hong Kong. "Some of the biggest funds are seeing more profit growth from Asia than anywhere else. This is reflected in the compensation of Asian hedge fund managers because assets under management (AUM) and returns are increasing so quickly."
According to one Singapore-based headhunter, top earners will own equity in the company managing the fund. "The company typically will earn 2% fees for assets under management and a percentage of profits, usually 20%," he explains. "If AUM is US$1bn and the fund makes a 20% return (US$200m), the company gets US$20m for fees and US$40m in profit. That means big earnings for equity holders."
Heidrick & Struggles' Lord adds that basic salary is irrelevant. "The real money is earned through dividends as the owner decides to keep a lot of the excess profit," he explains. "This is why you see new funds being established - both indigenous funds and sub funds within the global groups. That is really driving the Asian hedge fund industry at the moment."