UK hedge funds may have been under-represented in Bloomberg’s annual top 100 performing large funds, but seven still made the cut.
CQS, Odey Asset Management, AHL, Oxford Asset Management, Spinnaker Capital, Pelham Capital Management, Egerton Capital and Landsdown Partners all made the rankings.
As the £1.5m a head being shelled out at Brevan Howard demonstrates, working for a profitable hedge fund can be a lucrative vocation. More importantly, with a growing compliance burden increasing running costs and the average hedge fund posting just a 5.5% return last year, according to Hedge Fund Research, it’s also a more stable option.
Most hedge funds have only just posted their 2011 results on the Companies House website, which is where we get the pay and employment figures below. We have not included AHL since the compensation and headcount at the fund is not broken out in parent company Man Group’s reporting.
Funds in top 100: CQS Directional Opportunities (YTD return: 28.9%) and CQS ABS (YTD return: 14.3%)
Pay and employment prospects: Reliable information on CQS’s compensation and headcount is difficult to source, since Michael Hinzte’s firm reports under four different company names – CQS (UK), CQS Investment Management, CQS Asset Management and CQS Management.
The most detailed breakdown comes in the results of CQS Asset Management, which claims to have just 13 employees sharing a compensation pot of $1.9m, or £146.1k each. However, the 100 FSA registered people at CQS in 2011 shared a pot of £111m – or £1.1m each, according to reports.
At the end of last year, there were 75 FSA registered people working at CQS, and 10 of these joined the firm in 2012.
2. Odey Asset Management
Fund in top 100: Odey European (YTD return: 24.1%)
Pay and employment prospects: For the year to the 5 April 2012, Odey Asset Management spent £7.6m on 45 employees, or £168k per head. If this seems low, it’s worth bearing in mind that it was unlikely to be spread evenly, however, since 21 people work in investment management at the firm, while 24 work in an administration function. Crispin Odey, the founding partner of the firm, took home £9.4m, down from £15.4m the previous year.
Headcount increased from 39 in 2011. Andrew Goodwin, an assistant portfolio manager at the firm, and James Kostoris, joined Odey in December.
Although these figures are the latest available, they refer to 2011 when performance fees at the firm fell by 70% to £2.5m and profits tumbled by 22%. It’s likely to be a different picture next year.
3. OxFORD Asset Management
Fund in the top 100: OxAM Quant Fund (YTD return: 13.7%)
Pay and employment prospects: The highest paid person at OxFORD Asset Management, most likely founder and principal Dr Andre Stern, was paid £23.1m, according to Companies House filings. The number of staff at the firm increased slightly to 39, from 32 in 2010, and they shared a pot of £5.9m, or around £152.4k each. OxAM does, however, classify the majority – 36 people – as administrative staff.
There are just 10 FSA registered staff at the firm – although this increased from nine at the end of 2011 – and only Martyn Byman, who left New York-based Falcon Edge, joined in 2012.
4. Spinnaker Capital
Fund in the top 100: Spinnaker Global Emerging Markets (YTD return: 13.7%)
Pay and employment prospects: Spinnaker set aside £12.5m for its 21 employees for the year ending 30 June 2011, and a further £1.1m for the final six months of the year. This works out as roughly £620k per head for the period, with the highest paid director reportedly receiving £340.3k, which admittedly appears unusually low. There are 12 investment advisors working at the firm, which would have received the lion’s share of compensation, and 10 administration staff.
Only Hans Christopher Smith, who was formerly at Stoneworks Asset Management, joined the firm in an FSA registered role in 2012.
5. Pelham Capital Management
Fund in the top 100: Pelham Long/Short (YTD return: 11.9%)
Pay and employment prospects: Pelham had an average of 10 members employed in the year to April 2012, the most highly paid of whom received £15.1m. In total, it paid £25.3m to its members, suggesting that nine people shared £10.2m, or a not-too-shabby £1.1m each for the year. Only three ‘staff’ sharing £211k were recognised under the accounts. There were, unfortunately, no new FSA-registered recruits in 2012.
6. Egerton Capital
Fund in the top 100: Egerton European Dollar (YTD return: 11.4%)
Pay and employment prospects: Egerton paid its 45 employees £4.4m in the year to April 2012, or a relatively paltry £98.4k a head. However, just 11 people were employed in fund management functions and are likely to take the bulk of compensation, compared to the 34 administration staff. This was a year when the firm booked just £10,265 in profits. Egerton doesn’t appear to be a big recruiter, however, having added no people to the FSA register since 2010.
The firm also booked £7.6m in expenses related to senior staff in a separate company – Egerton Capital Limited Partnership – from which it pays its partners including chief investment officer John Armitage.
7. Landsdowne Partners
Fund in the top 100: Landsdowne Developed Markets (YTD returns: 10.1%)
Pay and employment prospects: Landsdowne paid its 86 staff an average of £171.3k in 2011, according to Companies House filings, down from £259k the previous year. Again, however, just 29 people are employed in fund management functions at the firm, with the remaining 57 in admin positions. Headcount increased by four people year-on-year.