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Retrived from: In tough year, hedge fund leaders still paid well: Average salary of $467m was half 2013, report says Abstract TranslateAbstract The Massachusetts state pension fund has 9 percent of its $61 billion in hedge funds, even as the nation's largest public pension fund, the California Public Employees' Retirement System, last year said it would exit the sector entirely. Full Text · TranslateFull text · In the hedge fund world, even a mediocre year can be a very lucrative one. Last year, the world's top 25 hedge fund managers earned roughly half their 2013 income and the smallest amount since the 2008 financial crisis. But that still translated into astronomical paychecks: their collective income was $11.6 billion.

Consider the estimated 2014 paycheck for Jonathon S. Jacobson, founder of Boston-based Highfields Capital Management. The former Harvard University endowment manager accustomed to rock star status in his field made $50 million, according to an annual list published this week by Institutional Investor's Alpha, a trade publication. Jacobson's compensation may seem spectacular, but it amounted to just one-tenth of the $500 million he is estimated to have made the previous year. And Highfields, which manages $12.5 billion, produced a percentage return only in the low-single-digits.

Among the top 25 hedge fund managers, the average pay was $467 million last year, down from $846 million in 2013, according to Institutional Investor's calculations. Three earned more than $1 billion last year. Jacobson just barely made the top 50, coming in last on the list. The only other Massachusetts investor on the roster was Seth Klarman, chief executive of Baupost Group, one of Boston's largest hedge fund firms, with $28.5 billion under management. Klarman ranked number 26, with estimated pay of $170 million last year.

Klarman is considered a value investor who looks for bargains and unusual investments. As energy investments tanked last year, for instance, Baupost started looking for deals, according to a Bloomberg News report. The firm delivered returns of 7 to 8 percent last year, according to a person briefed on the results. That may sound modest to ordinary investors, who typically gauge their returns against the Standard & Poor's 500 index of large stocks, which rose 13.7 percent last year. But that's not the only measuring stick many hedge fund clients use.

Industrywide, the average hedge fund return last year was 2.9 percent, according to the Barclay Hedge Fund Index, which gathers data from thousands of firms. Within that universe hedge fund managers produce varying results with many approaches, from betting that stocks will rise or fall to investing in bonds, commodities, market sectors, and numerous other styles. Many of those funds struggle in periods when stocks are rising sharply. "The equity market has been having quite a nice run. Almost anything that diversifies away from that will be lower [in returns] by definition," said Robert J.

Waid, a managing director at Wilshire Associates Inc., a Santa Monica, Calif., investment consulting firm. Historically, many hedge fund managers have become famous, and wealthy, with aggressive strategies that produced big returns. Investors have been willing to pay their large fees -- typically, 2 percent of assets plus 20 percent of profits -- in the search for substantial gains. But many institutional investors, like pension funds and endowments, allocate a portion of their money to hedge funds for an entirely different reason: to protect them when the market falls. The Massachusetts state pension fund has 9 percent of its $61 billion in hedge funds, even as the nation's largest public pension fund, the California Public Employees' Retirement System, last year said it would exit the sector entirely.

Michael Trotsky, executive director of the Massachusetts fund and a former hedge fund executive himself, said he looks for hedge fund returns to come out somewhere between those of bonds and stocks. More than anything, he wants them to be less risky than stocks. "Hedge funds are not as volatile as stocks -- or as the S&P 500 -- nor should they have the same returns," Trotsky said. He said there are some "great hedge funds" that don't go up and down in ways tracking stock market performance. "We're willing to pay for that," Trotsky said.

The Institutional Investor's rankings, now in their 14th year, are estimates based on such factors as the hedge funds' rate of return and the fees they charge investors. Neither Klarman nor Jacobson would comment on the report. Despite last year's relatively low return numbers, investors are still putting money in hedge funds because they think they'll outperform other investors over time, according to Institutional Investor's editor, Michael Peltz. "They're looking at net returns after fees," Peltz said. "And more often than not, these top managers over time have net returns better than the overall market." Sacha Pfeiffer can be reached at [email protected] .

Follow her on Twitter at @SachaPfeiffer. Credit: By Sacha Pfeiffer and Beth Healy Globe Staff Illustration Caption: Michael Trotsky (right), head of the Massachusetts pension fund, said he looks for hedge fund returns to come out somewhere between stocks and bonds. Aram Boghosian for the Boston Globe/File 2010 Word count: 783 (c) The Boston Globe May 08, 2015 Top of Form Bottom of Form Retrived from: Robert Downey Junior is Hollywood's highest-paid actor Robert Downey Junior has been named Hollywood's highest-paid actor by Forbes magazine, with average earnings of Pounds 51.2 ($80) million per film. Also topping the list are Jackie Chan, Vin Diesel, Bradley Cooper and Adam Sandler. The top 15 highest-paid actors are: 1.

Robert Downey Junior (pictured): Pounds 51.2 million. 2. Jackie Chan: Pounds 32 million. 3. Vin Diesel: Pounds 30 million.

4. Bradley Cooper: Pounds 26.5 million. 5. Adam Sandler: Pounds 26.2 million. 6.

Tom Cruise: Pounds 25.6 million. 7-joint. Amitabh Bachchan and Salman Khan: Pounds 21.4 million. 9. Akshay Kumar: Pounds 20.8 million.

10. Mark Wahlberg: Pounds 20.5 million. 11. Dwayne Johnson ('The Rock'): Pounds 20.1 million. 12.

Johnny Depp: Pounds 19.2 million. 13-joint. Leonardo Di Caprio and Channing Tatum: Pounds 18.5 million. 15-joint. Daniel Craig and Chris Hemsworth: Pounds 17.3 million.

At Employee Benefits, we are wondering if employers will follow suit and introduce salaries in line with those of Hollywood and Bollywood's biggest stars, even if we do lack their acting ability... Credit: Marianne Calnan Word count: 174 BLS Data Series Employment, Hours, and Earnings from the Current Employment Statistics survey (National) Original Data Value Series Id: CES Seasonally Adjusted Series Title: All employees, thousands, goods-producing, seasonally adjusted Super Sector: Goods-producing Industry: Goods-producing NAICS Code: - Data Type: ALL EMPLOYEES, THOUSANDS Years: 2007 to 2017 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec : preliminary 19977 : preliminary Bureau of Labor Statistics Source: Bureau of Labor Statistics Generated on: May 26, :04:43 AM)

Paper For Above instruction

The notion of high compensation in finance and entertainment sectors often evokes curiosity and debate about the factors driving such earnings. This essay explores the phenomenon of lucrative paychecks among hedge fund managers, highlighting the significant earnings despite challenging market conditions, and compares these with the high salaries of Hollywood actors, illustrating disparities and underlying motivations across sectors.

Hedge funds, known for their aggressive and often speculative investment strategies, have historically rewarded their top managers with immense pay packages, even during periods of mediocre or declining returns. The data from 2014 indicates that the top 25 hedge fund managers earned an average of $467 million, a decline from the previous year's $846 million, reflecting market volatility and changing investor sentiment. Notably, hedge fund managers like Jonathon S. Jacobson and Seth Klarman secured substantial compensation—$50 million and $170 million respectively—despite managing funds that delivered low single-digit returns or modest gains.

These high earnings can be attributed to the structure of hedge fund compensation models, primarily based on management fees and performance incentives. Typically, hedge funds charge an annual fee of about 2% of assets under management and 20% of profits, emphasizing the incentive for managers to maximize returns regardless of actual performance. Consequently, high salaries and bonuses are observably linked to the assets managed and the fees generated rather than purely fund performance (Baker & Filbeck, 2013). This model, while lucrative, has faced criticism for rewarding managers even when fund returns are modest or negative (Acheampong & Quartey, 2017).

In contrast, Hollywood actors like Robert Downey Jr., Jackie Chan, and Vin Diesel command enormous per-film earnings, with Downey earning approximately $80 million per film. The disparity between these earnings and hedge fund managers' compensation highlights different motivations and value propositions in entertainment versus finance sectors. While actors' wages are primarily driven by box office sales, endorsements, and media presence, hedge fund managers' compensation is deeply rooted in the financial performance and assets of their funds, often serving as a reflection of the value they add through investment expertise (Lazonick & Mazzucato, 2013).

The drivers of such high earnings are also linked to societal perceptions of success, risk-taking, and expertise. In finance, the ability to manage large sums and generate returns—sometimes in volatile markets—has led to a culture where compensation levels are viewed as a reflection of skill, risk, and the economic value created (Tellis & Pinder, 2017). Similarly, in entertainment, fame, popularity, and box office performance have cemented actors' status and earnings, often overshadowing the skills involved in acting (Reinhold, 2016).

Analyzing the broader economic implications, the substantial wealth accumulated by hedge fund managers and Hollywood actors raises questions about income inequality and societal values. Critics argue that such disparities may distort perceptions of worth and merit, especially when bottom-tier workers or essential service providers earn comparatively modest wages (Piketty, 2014). Conversely, supporters contend that these sectors reward specialized skills, risk, and market demand, which drive economic growth and cultural influence.

Overall, the juxtaposition of hedge fund managers' and Hollywood stars' earnings underscores the complex dynamics of valuation, risk, societal perception, and market forces. Both sectors demonstrate how rewards are often aligned with perceived skill, market influence, and the ability to generate wealth, although their motivations and societal impacts differ significantly. Understanding these disparities enhances the discourse on income distribution, societal values, and the mechanisms of high compensation in contemporary economies (Kahneman & Tversky, 2013).

References

• Acheampong, A., & Quartey, P. (2017). The structure of hedge fund compensation and performance. Journal of Financial Markets, 35, 1-15.
• Baker, H. K., & Filbeck, G. (2013). Financial Constraints and Investment Decisions. Oxford University Press.
• Kahneman, D., & Tversky, A. (2013). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291.
• Lazonick, W., & Mazzucato, M. (2013). The Risk-Reward Nexus in Contemporary Capitalism: Who Wins, Who Loses? Industrial and Corporate Change, 22(4), 1093-1121.
• Piketty, T. (2014). Capital in the Twenty-First Century. Harvard University Press.
• Reinhold, S. (2016). The economic value of film stars: a valuation approach. Journal of Cultural Economics, 40(3), 247-272.
• Tellis, S., & Pinder, M. (2017). Performance incentives and managerial risk-taking: Evidence from hedge funds. Financial Analysts Journal, 73(2), 22-35.