Tuesday, April 8, 2008

Hedge Fund Manager - Good Work if You Can Get it

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To break into the top 100 of "money manager's" pay in 2007, you had to clear $75 million. Best in class last year made $3 billion. Not bad work; these are truly epic times in terms of wealth generation for mankind - reminiscent of the Rockefeller era...all for essentially betting on the direction of paper as opposed to creating a railroad or some sort of tangible product. Quite amazing really.
  • A hedge fund manager who successfully bet on the slump in the US housing market, John Paulson, has come out top in the trading world, taking home a record-breaking $3bn (£1.5bn) in earnings last year. Paulson, 52, of the eponymous New York firm, ousted energy trader John Arnold - who made $1.5bn in 2006 after a successful bet on the direction of natural gas prices - from the top spot.
  • You need to have made at least $75m last year to make it into the list of the 100 top-earning fund managers compiled by Trader Monthly magazine. A handful took home 10-figure pay cheques after making smart sub-prime mortgage and other related bets.
  • Analysts said Paulson set a new record for payouts on Wall Street. He anticipated the nationwide decline in US house prices and record defaults on investment-grade mortgage bonds. Paulson's Advantage Plus fund was still up about 8% by mid-March while many other hedge funds have suffered heavy losses recently. Analysts estimate the average fund lost 5% in the first quarter of this year.
  • In second place was Phil Falcone at New York-based Harbinger Capital Partners, the former Harvard hockey star, who made an estimated $1.5bn to $2bn from housing-related bets.
  • James Simons, head of New York's Renaissance Technologies, who came very close to rival Arnold's income last year, has dropped down to the third spot with $1.5bn to $2bn.
  • Four of the top traders were based in London and made it into the top 10 for the first time. Chris Hohn of The Children's Investment Fund came sixth after taking home between $800m and $900m last year; followed by Noam Gottesman and Pierre Lagrange of GLG Partners and Alan Howard of Brevan Howard Asset Management, whose 2007 paychecks all totalled $700m to $800m.
  • As a group, the 100-best paid fund managers earned $30.3bn last year, 26% more than they took home in 2006. All but a handful on the list come from hedge funds.

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