How much can hedge fund managers make? A lot. A whole lot. Consider this list of the top-earning hedge fund managers of 2008, as reported by Alpha Magazine:

If you're motivated by the prospect of a very big payday, those numbers will be inspiring. But the information below will be a little more useful. The first thing to realize about the pay at hedge funds is it is largely about how the fund performs. Therefore it's the size of your bonus more than your base salary that determines how well you do overall. And bonuses paid for a given position are often explicitly tied to the fund's performance. In general, if the fund's return is stellar, your bonus will be too. If it sucks wind, so will your compensation. That is, if you're lucky. Often, if the fund does badly enough, you will simply be out of work. No matter how skilled you are, or how difficult overall market conditions are, if you work for a hedge fund that loses a significant amount of money you will likely lose your job.

The second thing to realize about the pay at hedge funds is that the principals and senior portfolio managers take home most of it. The pay for more junior positions in successful hedge funds can be extremely attractive, as the tables below show. But if you're after the really, really big bucks, what you're gunning for is to become a senior portfolio manager or run your own fund. And that'll take some time, experience, skill, and luck. So in the meantime, since you'll be working awfully hard to position yourself for that opportunity, you might as well make sure the work excites you. Because after all, it's not just about the money. Is it?

Salary Comparison

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