BOSTON (Reuters) — A post-graduate degree may not be the smartest investment for a young professional going into the hedge fund industry.
Hedge fund associates with undergraduate degrees bring home bigger paychecks than their peers with advanced business degrees, according to a survey conducted by SumZero, an online community of fund professionals.
So-called pre-MBA associates took home an average of $200,000 (all dollars US), including a $90,000 bonus, according to SumZero's 2016 Fund Compensation Report, which is based on a survey of more than 1,800 associate positions between 2012 and 2015. Associates with an MBA, meanwhile, took home an average of about $184,000, including a bonus of $60,000.
SumZero struggled to explain the results.
"It is unexpected to see the pre-MBA associates out-earning their peers," said Nicholas Kapur, chief operating officer at SumZero. "There is a chance that those without MBAs have a greater incentive to perform because their roles are generally not permanent ... Our best guess is that the pre-MBA pool might just be a bit more competitive."
The report also found that chief investment officers at hedge funds tend to make a base salary of $125,000 and $100,000 in bonus, while a senior vice president tends to make $200,000 in base salary and $187,500 in bonus.
Hedge funds have long been seen as a place to earn enormous salaries, with fund owners often earning hundreds of millions of dollars. In 2014, the latest year for which data is available, Citadel's Kenneth Griffin, Renaissance Technologies' James Simons and Bridgewater Associates' Ray Dalio each earned over $1 billion to rank as the industry's highest paid managers.
Even the rank and file at hedge funds who have been contributing confidentially to SumZero's database are hopeful that 2016 will mean more money for them despite the year's rocky start with global markets tumbling.
"We see professionals in the fund industry expecting to make $20,000 to $30,000 more in 2016 than 2015," said Luke Schiefelbein, data science lead at SumZero. "Compensation expectations for 2016 seem surprisingly strong relative to the bumpy start in the markets."