The alternative investment industry has seen tremendous growth in recent years. Investors are increasingly allocating capital to alternative assets like private equity, venture capital, hedge funds, real estate and infrastructure. As a result, alternative investment managers have seen their compensation rise substantially.
Hedge fund managers earned highest compensation among alternative investment professionals
According to Institutional Investor’s Alpha 2020 Hedge Fund Rich List, the top 25 highest-earning hedge fund managers made over $15 billion in 2019. Ray Dalio of Bridgewater Associates topped the list with over $1.3 billion in earnings. Other prominent hedge fund managers like James Simons, Ken Griffin, Steve Cohen and Chase Coleman each took home around $1 billion or more.
Private equity and venture capital managers also earned large paychecks
Though not as high as hedge fund managers, private equity and venture capital managers also earn very lucrative compensation. According to Private Equity International’s 2020 ranking, Apollo Global Management’s Leon Black and Marc Rowan each made over $600 million. TPGG’s David Bonderman made over $800 million in 2019.
Real assets managers see compensation growth amid investor demand
As investors pour more capital into real assets, managers specializing in real estate, infrastructure, natural resources are seeing their pay go up. According to Chief Investment Officer, median compensation for a real assets portfolio manager in 2019 was around $750,000.
Increased capital raising benefits alternative investment managers
The robust fundraising environment has allowed alternative asset managers to increase their fee earnings via higher management fees and carried interest. This is especially true for private capital managers who earn recurring management fees and a cut of investment profits.
In summary, alternative investment managers especially those running hedge funds, private equity and venture capital strategies are earning extraordinary compensation owing to the strong growth in alternative assets. The median pay for an alternative investment head can run into tens of millions of dollars.