Take-home pay among asset management professionals in Asia is forecast to continue its climb as the region’s growth story attracts investor inflows.
An annual buy-side survey by research firm Greenwich Associates shows that total compensation increased similarly for equity and fixed income staff in Asia across 2011, although the former still get paid more. The data lags, with 2012 numbers not due to be compiled until later this year.
Asian equity professionals – from CIOs to traders – saw their pay rise an average of 1.2% year-on-year to $337,000 in 2011, compared with a 1.3% increase on the fixed income side to $316,000.
This compares with investment managers/mutual funds/advisers in the US, who saw an average 1.4% drop in annual pay to $690,000 on the equity side, in contrast to a 16% increase for fixed income staff to $490,000.
In other words, Asian equity professionals earn an average of 49% of their US counterparts, and fixed income staff 65%.
Both are dwarfed by hedge fund pay, however, which this research only covers in the US. It shows equity hedge fund managers saw total compensation rise 83% to $1.28 million per year in 2011, while on the fixed income side it fell 14.3% to $890,000.
The researchers are forecasting a 5.8% rise for US investment managers/mutual funds/advisers on the equity side to $730,000 in 2012, and an 8% increase for fixed income staff to $530,000.
While the research does not forecast for Asia, Abhi Shroff, Singapore-based consultant at Greenwich, notes this region has seen salaries rise for the past two years. To read the 2010 findings from the data last year, click here.
“There has been a slight increase, although you could call it flat,” Shroff notes. “What the main asset managers have been telling us is that the market is starting to stabilise and that they are able to increase compensation after being flat for a couple of years.”
He notes that one way to have a forward-looking view on Asia is to see what’s happening in the underlying markets. “One thing we are seeing is bigger inflows into Asia, from both offshore and local investors,” he says.
“Many institutions we speak to are looking at regional, rather than global, strategies, and this includes emerging markets, Asia and single country. This increases demand for people on the ground in Asia and that pushes up compensation levels.”
Interestingly, while salaries rose for Asian equity and fixed income staff by an average of just under 3%, their bonus pools fell by around 0.7%.
Shroff acknowledges the dynamic, adding that firms are handing their most senior staff a bigger percentage of the bonus pool than more junior employees. “They are not spreading it out evenly. They are saying, ‘We will focus on the senior guys in an effort to keep them, as opposed to junior people who have fewer places to go’.”
The data shows an Asian equity CIO saw their 2011 salary remain static at an average of $333,000, while their bonus shrank 26% year-on-year to $215,000, for total compensation of $548,000.
Meanwhile, equity investment officers saw their average 2011 salary fall marginally to $176,000, as did their bonus to $102,000, for total compensation of $278,000.
On the fixed income side, a CIO saw their 2011 salary increase an average of 4.7% to $310,000 and bonus 11% to $205,000, for total compensation of $515,000.
And an investment officer saw their 2011 salary and bonus increase marginally to $107,000 and $49,000, respectively, for total compensation of $156,000.
Geographically, Singapore is the best-paid market for asset management staff in Asia-Pacific. On the equity side the average total compensation was $442,000 for the city-state, against $319,000 in Hong Kong. The research did not break out other markets.
Singapore was also top for fixed income staff at an average of $471,000, ahead of Australia/New Zealand with $441,000 and Hong Kong on $307,000. The lowest in the study for fixed income were Indonesia at $50,000 and Taiwan at $59,000. China was $1,000 above the Philippines at $70,000.
In terms of the type of compensation, it is noticeable that Asia is behind the US in terms of long-term incentives, which for fixed income staff comprises around 6% of salary and for equity personnel 9%. That compares with the US, where it is 10-15%.
“You are seeing a bigger push towards long-term incentives in Western markets, where there is more external pressure,” suggests Shroff.
But he adds that he “gets a sense” Asian asset managers are trying to find a way to incentivise staff more, most commonly through corporate equity or in-house investment funds, although he is hearing more about cash deferral schemes.
For its equity report, Greenwich Associates surveyed 235 finance professionals at buy-side institutions between July and September 2012. Their fixed income report was based on interviews with 1,760 professionals between April and July 2012.