Even Funds That Lagged Paid Richly

By JULIE CRESWELL
NYT

Ten years ago, when the hedge fund industry was much smaller than it is today, it took 25 hedge fund managers to earn a combined annual payday of $5 billion.

Last year, it took only one.

John Paulson, who rose to fame in 2007 with a prescient bet against subprime mortgages, earned a record $4.9 billion in 2010 as a result of a big wager that his fund, Paulson & Company, made on gold. The metal soared last year, lifting the values of some hedge funds by more than 30 percent.

Last year was very lucrative for some of the biggest and best-performing hedge funds’ chiefs. Wealth was so concentrated that a mere 25 people pocketed a total of $22.07 billion, according to this year’s annual ranking by AR Magazine, which tracks the hedge fund industry. At $50,000 a year, it would take the salaries of 441,400 Americans to match that sum.

Hedge fund managers can still have huge paydays even in years when their funds do not perform well. That is because of the millions they earn in fees from charging state pension funds, college endowments and wealthy individuals to manage money. These fees are typically collected regardless of whether the firm has a profit or a loss.

(More here.)