Performance Copmpensation
An incentive-based form of compensation that is reserved for hedge fund managers or elite portfolio managers.
Many hedge fund managers are paid 20% of client profits if their investment returns are over a predetermined benchmark. Under this form of compensation, talented hedge fund managers that manage large funds can easily earn tens of millions of dollars (if not more).
Pay based on the performance of the portfolios they manage.
If you do well, you get paid well.
A significant portion of the managers’ compensation comes from performance-based bonuses. Ninety percent of those surveyed were bonus-eligible, and indicated that, on average, bonuses comprise 25% of their overall package. Bonuses can be tied to individual, business unit, and/or firm performance. Some are a percentage of total assets.
The bonus component also means that companies aren’t stuck paying high salaries when the market’s down. So this certainly isn’t a rest-on-your-laurels type job, but there’s ample reward for a job well done.
In the End, Money Managers Do as Well as the Market
Over the last decade, almost three quarters of all money managers were unable to out-perform the S&P 500 index when fees were taken into consideration. It appears that the efficient market theory holds true for the most part. Those interested in pursuing a career in money management should understand the challenge it is to establish a reputation and outdo the market
Money managers all have their special way of doing things; whatever your method, the important thing is to be open-minded, well disciplined, and objective about investments.
Lots of Money Managers purchase and carry corporate bonds, agency securities, asset-backed securities and other fixed-income investment products. Some specialize in small stocks, large cap funds, fledgling markets, and other equities.
Work in this area necessitates discipline, patience and a broad knowledge of companies and markets in the financial sector. |
