Managers Face Deep Pay Cuts During 2014’s Bad Year for Hedge Funds

May 10, 2015 Maria Morales Economic Barometer

It is no secret that 2014 was one of the worst years in history for hedge fund returns. And don’t think the managers of these funds haven’t had to take some of the responsibility, in the form of lower wages.

As a group the 25 top-earning hedge fund managers collected what most of us would consider a (more than) respectable $11.6 billion in income, despite the poor showing of the funds they were managing. Sounds like a lot of money, right? And it is. But the managers, as a group, experienced their collective $11.6 billion take home pay as a pay-cut by half, compared to what they made in 2013.

Not to beat a dead (but rich) horse into the ground, but hedge fund managers believe that their earnings for 2014 were actually “paltry.” This is how they feel, and we know feelings are always valid. However, when those of us still living in the real world look at $11.6 billion, we see an amount of money which is larger than the GDP of Nicaragua, Laos or Madagascar. Not bad for 25 guys. (No woman has yet found her place on this list of 25 top-earners in the 14 years since the list’s inception.)

“How bad was [2014]?,” Alpha magazine asked. “The 25 hedge fund managers on our 14th annual Rich List made a paltry $11.62bn combined, barely half of the $21.15bn the top 25 gained the previous year and roughly equal to what they took home during nightmarish 2008.Harsh memories of the global financial crisis pervaded Wall Street in 2014 – at least, for the highest-earning hedge fund managers.”

Sorry for the harsh memories. I wonder if Kenneth Griffin of Citadel, Renaissance Technologie’s James Simons, or Ray Dalio of Bridgewater Associates’ can sleep at night wondering if they can feed and house their families on a mere $1 billion take-home in 2014, which is what each of the top three earners made.

We suggest that these “Rich-List” dwellers save some of their pay from one year to the next in case another terrible year should haunt them once again.

(In case you were wondering, a person, or family, would have to spend $2.7 million every single day of an entire year to spend 1 billion dollars. That’s a heck of a lot of Cheerios.)

14th annual Rich List, Alpha magazine, Bridgewater Associates, Citadel, Hedge Funds,

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