How much can you make at a hedge fund?
The money is a big draw as well: if you're at the right fund and you perform well, you can earn into the mid-six-figures, up to $1 million+, even as a junior-level employee. The top individual Portfolio Managers can earn hundreds of millions or billions each year.
| Annual Salary | Monthly Pay | |
|---|---|---|
| Top Earners | $114,000 | $9,500 |
| 75th Percentile | $100,000 | $8,333 |
| Average | $77,940 | $6,495 |
| 25th Percentile | $51,000 | $4,250 |
A hedge fund is an investment vehicle that aggregates capital from multiple investors. These funds are run by professional management companies. The most successful hedge fund managers handle billions of dollars in assets for their clients, and their earnings can reach into the billions as well.
Hedge funds employ some of the best-paid business professionals anywhere, but landing your first job in the industry is no cakewalk. Building a hedge fund career takes determination, networking stamina, and a fierce competitive streak. Here are some steps to help get you to that interview and then land that job.
As of Mar 23, 2024, the average annual pay for a Hedge+Fund+Portfolio+Manager in the United States is $127,751 a year.
The money is a big draw as well: if you're at the right fund and you perform well, you can earn into the mid-six-figures, up to $1 million+, even as a junior-level employee. The top individual Portfolio Managers can earn hundreds of millions or billions each year.
Successful hedge fund managers routinely pocket millions of dollars in total compensation, with the top fund managers earning paychecks in the billions of US dollars[1]. This doesn't include how much they personally stand to benefit from their own investments in the funds they manage.
Hedge funds seem to rake in billions of dollars a year for their professional investment acumen and portfolio management across a range of strategies. Hedge funds make money as part of a fee structure paid by fund investors based on assets under management (AUM).
Work days do tend to follow somewhat of a routine, with market open and close being the most critical. In addition to trading, hedge fund managers must also make sure all of their positions are in order, their models up-to-date, and their business/social lives active to keep investors and brokers happy.
Are all hedge fund owners/managers super wealthy? Of course not. The majority of hedge funds lose money, and the majority of managers have only moderate wealth (and some have low or negative wealth). Since there are no barriers to entry, if all hedge fund owners were super wealthy, everyone would be super wealthy.
What GPA do you need to get into a hedge fund?
There is no specific or average GPA requirement for becoming a hedge fund analyst. However, hedge funds tend to hire top-performing graduates from prestigious universities and top-ranked business schools. These candidates typically have strong academic records, including high GPAs and test scores.
Hedge fund analysts typically work between 60 and 70 hours a week. Working on the weekend is not common but it certainly does happen from time to time.
A Bachelor of Science (B.S.) degree in finance is ideal for a variety of hedge fund jobs, but your major will matter. Bachelor of Science degrees in mathematics, accounting, physics, computer science, and even engineering are also useful, given the recent rise in algorithmic trading.
In total, Forbes counts 47 hedge fund billionaires who have a combined net worth of $312 billion, up slightly from the same number in 2022 who were worth $310 billion.
At smaller, single-manager funds, the average might be 10-12 hours per day, for a total of 50-60 hours per week (weekend work is rare). As you move to larger, multi-manager funds, the hours and stress get worse, so the average may be more like 60-70 hours per week.
| Annual Salary | Hourly Wage | |
|---|---|---|
| Top Earners | $160,000 | $77 |
| 75th Percentile | $111,500 | $54 |
| Average | $98,601 | $47 |
| 25th Percentile | $59,000 | $28 |
Hedge fund managers typically earn above-average compensation, often from a two-and-twenty fee structure. Hedge fund managers typically specialize in a particular investment strategy that they then use to power their fund portfolio's mandate for profits.
On the downside, hedge funds can be demanding and high-pressure environments. Interns and analysts often work long hours and may be required to work weekends. Additionally, the compensation is often lower than at other financial institutions.
Working at a hedge fund can be very lucrative as salaries are high and the associated perks can also be considerable. 1 But to qualify for a job in this competitive industry requires multifaceted skills, knowledge, and the right temperament.
In 2007 he became the youngest billionaire in the U.S. Chase Coleman founded a hedge fund Tiger Global Management at the age of 26. In 2023 his wealth is estimated to be $8.5 billion.
Do rich people use hedge funds?
Hedge funds are investment vehicles geared toward the wealthy. Investors are typically high-net-worth individuals, pension funds, and institutions. Hedge funds employ unique investment strategies in order to outperform the market. They charge high fees for doing so.
Because of this, hedge funds tend to cater to high net-worth individuals and require large sums to invest—leaving the ordinary investor out of luck. It is possible to invest in hedge funds, but there are some restrictions on the types of investors who comprise a hedge fund's investor pool.
Strategies Used by Hedge Funds
Some strategies, such as managed futures and short-only funds, typically have higher probabilities of failure given the risky nature of their business operations. High leverage is another factor that can lead to hedge fund failure when the market moves in an unfavorable direction.
Bridgewater Associates
Westport, Conn. Westport, Conn. In 1975, Bridgewater Associates was founded by Ray Dalio in his Manhattan apartment. Today Bridgewater is the largest hedge fund in the world and Dalio has a personal fortune of approximately $19 billion.
With respect to establishing a U.S. hedge fund, average hedge fund startup costs range from $50,000 to $100,000, and first- year operational costs usually total $75,000 to $150,000.
