Mutual funds are pooled financial assets investing in various financial products. A mutual fund company typically has different fund categories, such as bonds, growth stocks and international stocks. Private equity funds and hedge funds are variations of mutual funds catering usually to more risk-taking and high-net-worth investors. Performance bonuses are an important part of the total compensation for mutual fund managers.
U.S. mutual funds have come a long way since 1940, when there were 68 mutual funds, 296,000 shareholder accounts and $450 million in net assets. Net assets were about $7 trillion in 2000. In 2009, there were about 7,700 funds, 271 million shareholder accounts and $11 trillion in net assets, according to the Investment Company Institute's 2010 Fact Book (see Resources).
Mutual fund managers are often known as portfolio managers. According to PayScale, in November 2010, the annual salary range for portfolio managers was about $68,000 to $144,000. By popular industry sub-sectors, the annual ranges were about $51,000 to $90,000 in banking, $52,000 to $92,000 in commercial banking, $56,000 to $100,000 in financial services, $60,000 to $109,000 in investment services and $61,000 to $107,000 in asset management. According to a small-sample November 2010 PayScale survey, the annual salary range was about $90,000 to $187,000 for investment fund managers. They typically run institutional funds.
Salaries by Experience
According to PayScale, in November 2010, annual salary ranges for portfolio managers were about $44,000 to $86,000 for less than a year of experience, $64,000 to $100,000 for five to nine years, $82,000 to $133,000 for 10 to 19 years, and $82,000 to $140,000 for 20 years or more of experience.
Salaries by City
According to PayScale, in November 2010, annual salary ranges for portfolio managers were about $87,000 to $147,000 in New York, $75,000 to $147,000 in Boston, $69,000 to $145,000 in San Francisco, $73,000 to $147,000 in Chicago, $62,000 to $129,000 in Los Angeles, $73,000 to $115,000 in Philadelphia and $79,000 to $132,000 in Houston.
Salaries for Private Equity Fund Managers
Usually structured as partnerships, private equity firms invest private equity in businesses they consider attractive. The partners tend to be high-net-worth individuals, pension funds, foundations and sovereign wealth funds. In a small-sample November 2010 PayScale survey, the annual salary range for private equity fund managers was about $96,000 to $275,000.
Salaries for Hedge Fund Managers
A hedge fund can take both long and short positions; trade undervalued securities, currencies and commodities; and invest in any opportunity with high risk and high chance of return. The 25 top-earning hedge fund managers made a record $25.3 billion in 2009, according to AR: Absolute Return+Alpha magazine rankings, reported by CNN Money. The highest-paid manager on the list was David Tepper of Appaloosa Management, who made $4 billion in 2009 on investments in the financial sector.