- In-demand hedge fund traders are garnering eye-popping salary packages as top Wall Street banks cut costs.
- Millennium offered certain hires nearly $60 million in guaranteed pay, sources told The New York Times.
Wall Street's top hedge funds were able to capitalize on the market downturn last year, raking in profits not seen by some of the largest investment banks.
This has allowed trading shops like Citadel, Millennium Management, and Steven Cohen's Point72 to offer tens of millions in salary packages to score the most in-demand traders and maintain their profit-making streak, sources told The New York Times.
For example, Millennium offered certain prospective hires nearly $60 million in guaranteed pay, according to the report, citing people briefed on the confidential arrangements.
"You're seeing Tom Brady-like pay packages," Colin Lancaster, a former Citadel executive, told the outlet. The recently retired NFL star made $25 million per year, the report reads, not including the millions in outside partnerships.
Citadel, the hedge fund run started by Kenneth Griffin, posted $16 billion in profits in 2022, while the Nasdaq Composite and S&P 500 posted double-digit percentage losses in the same period of time.
Firms like Citadel were able to notch record-breaking annual gains during last year's market downturn, in part, because they often use multiple strategies at the same time. Shops often do this to both minimize risk and swiftly allocate based on their traders' assessments of market conditions and economic trends.
It's not all wins for hedge funds across the board though. Despite the top 20 fund managers making $22.4 billion for their investors in 2022, excluding fees, the industry lost a combined $208 billion last year, according to a report from LCH Investments.
But the massive pay that some hedge funds are giving to traders contrasts starkly with Wall Street banks like Goldman Sachs, which slashed over 3,000 jobs in a sweeping cost-cutting drive in recent months. This was the largest series of layoffs by the investment bank since the 2008 financial crisis. And BlackRock, the world's largest asset manager, also had its first round of job cuts since 2019.