Compensation for quant researchers in hedge funds

[Quakko]

I have already gathered a lot of information about this industry, but I do not seem to be able to find reliable sources about compensation. In some places I read that quants earn only 150k TC even after several years, in others I read that they start at 300-400k and progress to 700k-1m in just 5 years. What's the truth? Can some insider give me some ranges for compensation progression for quantitative researchers in quant hedge funds (say, top 30) for a PhD graduate that joins soon after graduation.

More specifically, I would like to know what are some reasonable ranges for:
- first year comp
- 5th year comp
-10th year comp
-20th year comp (do most quants really last this long?)

All I know for sure at the moment is that Jane Street pays first year quant traders a base of 300k (bonuses are paid on top and TC is about 600k). But Jane Street is probably the second most elite firm after Rentech, so I am wondering if these numbers carry any significance in the industry as a whole or if its's just JS that pays out of the ordinary.

Thanks a lot.

 

[MMFInfoAcct]

I can provide the first year total comps but it should be noted that these are prior to negotiation (usually fairly easy to negotiate the sign on), sign on is a big chunk of the first year TC, and some firms pay differently for PhD vs masters vs undergrad. Also, the past few years have been exceptionally great for many firms (some people say high volatility markets for good funds is the closest you’re gonna get to just printing out money) and so the packages offered in recent recruitment cycles might be greater than usual. I do not know too much about the TC after first year but I heard the pay starts to depend much less on the specific firm and more on your strategies - the 5th and 10th year comp has high variance even within the same firm.

Citadel/Cit sec, JS, HRT, Radix: 500k+ with some entering the 600k territory. The main drivers of this package are the base and sign on which are significantly above industry standard. The guaranteed first year bonus is roughly in line with industry standard. I wouldn’t really definitively say JS is the second most elite firm after Rentech: Citadel/JS/HRT are elite ‘main stream’ firms that everyone knows about but Radix imo is more similar to Rentech. Also heard TGS and PDT partners are up there but personally never got opportunity to interview with them or even meet anyone there. De Shaw is possibly in this range too.

a majority of other funds: around mid 300s to low 400s (I’d say this range is the buy side QR industry average). IMC/DRW offers about a 175/75/100 base, sign on, end of year bonus. Heard cubist is around 400k TC (but might depend on the pod), two sigma usually pays in this range too for masters students but I seen some crazy PhD return offers for two sigma in the JS range (the guy was completely stacked though). Heard Millenium is closer to like high 200s instead (but again this might be very pod dependent)

squarepoint, seven eight capital: Squarepoints first year package had low 100ks as a base. first year comp is definitely on the lower side but I heard more opportunities for growth, so who knows, a good performer at these firms 5 years down the line can potentially be out-earning the other funds.

 

[Quakko]

I can provide the first year total comps but it should be noted that these are prior to negotiation (usually fairly easy to negotiate the sign on), sign on is a big chunk of the first year TC, and some firms pay differently for PhD vs masters vs undergrad. Also, the past few years have been exceptionally great for many firms (some people say high volatility markets for good funds is the closest you’re gonna get to just printing out money) and so the packages offered in recent recruitment cycles might be greater than usual. I do not know too much about the TC after first year but I heard the pay starts to depend much less on the specific firm and more on your strategies - the 5th and 10th year comp has high variance even within the same firm.

Citadel/Cit sec, JS, HRT, Radix: 500k+ with some entering the 600k territory. The main drivers of this package are the base and sign on which are significantly above industry standard. The guaranteed first year bonus is roughly in line with industry standard. I wouldn’t really definitively say JS is the second most elite firm after Rentech: Citadel/JS/HRT are elite ‘main stream’ firms that everyone knows about but Radix imo is more similar to Rentech. Also heard TGS and PDT partners are up there but personally never got opportunity to interview with them or even meet anyone there. De Shaw is possibly in this range too.

a majority of other funds: around mid 300s to low 400s (I’d say this range is the buy side QR industry average). IMC/DRW offers about a 175/75/100 base, sign on, end of year bonus. Heard cubist is around 400k TC (but might depend on the pod), two sigma usually pays in this range too for masters students but I seen some crazy PhD return offers for two sigma in the JS range (the guy was completely stacked though). Heard Millenium is closer to like high 200s instead (but again this might be very pod dependent)

squarepoint, seven eight capital: Squarepoints first year package had low 100ks as a base. first year comp is definitely on the lower side but I heard more opportunities for growth, so who knows, a good performer at these firms 5 years down the line can potentially be out-earning the other funds.

Thank you very much for this great answer. It's this kind of detailed explanations that makes this forum worth consulting.

If you were to give an estimate, how many people working as quant researchers/traders in the top 30/50 hedge funds make more than $500k after 5/10 years? How about more than 1m?

I am aware that, as you said, this might be very fund/performance dependent but I would be grateful if you could just give me a rough idea since I really have very little clue. All I have been told is that 1m is theoretically achievable, but as far as I know it could be the case that only people in the top 5% of the top 5 hedge funds get that much, or on the contrary it could equally likely be the case that this is more or less the median for people who spent 5/10years in the industry.

 

[MMFInfoAcct]

I'm only a new grad so I cannot definitively provide an answer, but based on the orientation of the firm I will be joining early next year, my impression is that the majority of people that can survive 5-10 years is easily clearing 500k+ especially since first year pay at quite a few places is ~400k already. However, 5-10 years is already considered fairly tenured in the buyside QR industry - it might be more useful to consider how many people can survive that long in the first place rather than the # of people hitting a certain TC. The pay is highly variable depending not only on your own performance but the performance of the firm as a whole so it's pretty hard to give an exact number of quants w/ 1m+ TC as this changes year by year (I think some firms like IMC do provide yearly public documents of how many people make 7 figs though if you want to check). My general impression though is that at least in recent years quite a few people with 5+ YOE are clearing 1m+ because several firms capitalized really well on the whole covid situation. JS made several billion in profits in 2020, Optiver has crazy marble values in the past few years, Citadel quants are also probably very happy this year with 30+% firm returns (on a side note heard they threw an amazing end of year party to celebrate just several weeks ago with Diplo/Coldplay/Carly Rae Jepsen performing), so I wouldn't be surprised if a substantial % of experienced quants are breaking 1m+.