As hedge funds go, AQR Capital Management, the '$226bn giant of quantitative investing' doesn't pay super well. It doesn't pay badly, but if you work there you're not going to be sniffing at the heels of Cliff Asness, AQR's founder - who has a net worth of $3bn and a distant history of raging at computer screens.
AQR Capital Management (Europe) LLP just released its results for 2017. They reveal that the fund employed 31 people in London last year and paid them a total of £8.9m including employer's tax and pension costs. That's an average of £283k ($372k) per head, or £252k after taxes and pensions are removed.
While there are unquestionably many, many people in London for whom £252k would rightly be a small fortune, AQR is the sort of rarefied quantitative hedge fund that typically employs a small handful of people on exorbitantly large sums. What seems to be happening is that AQR is hiring, and that pay is falling - headcount went from 18 to 31 last year, and average all-inclusive pay fell from £322k to £283k in the process.
AQR's pay doesn't look quite so fancy, when you consider that M&A boutique Perella Weinberg paid an average of £331k ($431k) per head in London last year. Maybe relationships pay more than quantitative ability after all?
Of course, there are people at AQR in London earning more than this. They are the partners ('members'), the most highly remunerated of whom got £2.3m last year. Three members shared £5.9m in total. One of them was Scott Richardson, a former professor at London Business School turned portfolio manager in AQR’s Global Alternative Premia group. Another was unnamed. Another was a whole new entity known as AQR Capital Management UK Services with around 19 employees. Opaque.
The good thing about AQR in the UK is that it does at least appear to be doing pretty well for itself. Last year, its turnover went from £13m to £19m and its profits went from nearly £5m to nearly £6m. The bad thing is that margins are clearly being eroded, which may account for the apparent squeeze on pay. Richardson's former pupils could always ask some probing questions to find out.
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