Recruiters say hedge funds are racing to match pay for banking juniors.
Pay for junior hedge fund staff has risen over 10% in the past year, says Claude Schwab, chief exec at US hedge fund search firm Schwab Enterprise.
Schwab says banks have set the pace, with top juniors now earning six figure sums: "Funny how banker analysts used to look with envy at hedge fund analyst pay, but now that banks are doing so well, hedge funds are looking to see what bankers get paid at the analyst level."
Peter Elliott, a director at Emerson Chase City, a hedge fund recruiter with offices in London and New York, says phenomenon is evident on both sides of the Atlantic.
Some funds are offering extra inducements. Dermot Coleman, a director at Sisu Capital, a London-based even driven fund, tells us trainees who scale the ranks are being given ownership stakes. "When someone joins as a graduate, they need to know how they will become a principal of the fund - whether through direct equity in the management company or a stake in a sub-fund," he says.
Coleman says Sisu has made three people principals in a new distressed debt fund launched 18 months ago. Payouts are unlikely to be immediate, but the move could make long term sense: Sisu's staff might earn generous payouts even after the banking cycle has turned.