The 20 Rising Stars of Mutual Funds 2008 - (Page 8) Pay For Performance Fund manager compensation is likely to hold steady for most, but a greater number will see their bonuses tied to performance By Mark Malyszko C OMPENSATION FOR MUTUAL fund portfolio managers and others is expected to remain steady in the U.S., despite the credit crunch and mortgage crisis, according to recruiters and industry observers. Increases in base pay are likely at the largest fund companies, following a general trend of increasing compensation by 5-10% per year. Where the tightening may occur is with bonuses as more firms look to tie them to performance, observers said. Barry Emen, president of MJE Recruiters in Florham Park, N.J., said his projection for this year is for a leveling off in some areas, such as for mutual fund administrators and presidents. “We’re probably going to hit a ceiling there,” he noted. Emen, however, agreed that compensation is not likely to slip. “Compensation will be steady,” he said. He anticipates top fund companies will pay more for top talent, but everywhere else increases will be slower. Even though observers and recruiters agreed that the current mortgage crisis is not likely to have a significant impact on mutual fund compensation, fund companies generally will be more cautious in a slowing economy, in particular with hiring. Emen believes that the sectors of the fund companies’ investments, the size of those firms and the overall stock markets will all play into what extent the impact of the subprime fallout will have. For example, firms may be more resilient to curtailing growth in compensation packages for portfolio managers invested in biotech or energy stocks than for those invested in financial services, he explained. “Hiring may be curtailed,” Emen said. “The overall hiring trend this year will be steady to down.” Boutique firms, JANUARY 2008 8 MUTUAL FUND RISING STARS
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