If you’re a trader who wants to work for a hedge fund, Millennium Investment Management has something going for it. The hedge fund is divided globally into independently run teams, each of which is rewarded proportionate to its own results. Whereas other large funds pay on the basis of ‘netting’ (gains minus losses) across strategies, Millennium’s pay structure is more granular – if your team’s strategy does well, you’ll be rewarded, even if all other teams at the fund make a loss.
What does this mean for salaries and bonuses at an individual level? Millennium doesn’t divulge pay globally, but the fund’s two UK-based entities, Millennium Capital Management Ltd. (the UK holding company, which includes all administrative and investment staff) and Millennium Capital Partners LLP (the partnership comprised predominantly of the investment staff) publish accounts, with pay figures included.
Millennium Capital Partners LLP has just published accounts for 2020, and they reveal a dramatic increase in pay and headcount.
Last year, Millennium Capital Partners employed 212 professional staff, up from 166 in 2019 and 127 in 2018. It paid them a total of £266m, or an average of £1.3m each - up from £828k a year previously.
Millennium's 12 UK partners also did well, earning an average profit of £5.9m in 2020, compared to £2.9m in 2019. The pay distribution for partners was, however, skewed towards a corporate entity which received £46m of the £70m profit pool. Nonetheless, individual human partners didn't do badly: when £155m of partner remuneration is added in, along with the remains of the profit pool, it looks like Millennium's 10 or so human partners in London received an average of around £18m each last year.
This windfall comes after profits at Millennium Capital Partners LLP more than doubled from £99m in 2019 to £225m in 2020. As we've reported, Millennium wasn't the only hedge fund benefitting from a windfall during the pandemic: ExodusPoint, Citadel, Caxton and Balyasny each had a similar experience.
Early in March 2020, major hedge funds were said to be facing big losses on arbitrage trades as markets dried up due to the pandemic. However, central banks subsequently flooded the market with liquidity, and funds seem to have done very well as a result.
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