How Does That Taste?

The chatter has started. Bonus season is here.

Our take on it is a little different.

Despite all the hoopla...not everyone is going to get paid. Some people get screwed out of money they are due. They have our sincerest sympathies…

Other folks get what they deserve. 

Hedge funds employ a simple 1/20 fee structure. They generally charge one percent of the fund’s assets as a fee and claim 20% of the funds gains as their own. A few do even better. Nice work if you can get it.

Mutual funds are different. Many fund families grade their portfolio managers against peers in a category (Large Cap Value for instance) and their respective benchmark. Bonuses are based on a relatively simple formula that incorporates these quantitative factors and to a lesser extent qualitative ones. But you have to keep ahead of the Joneses in your peer group to get paid big bucks.

Bonus compensation for mutual fund managers can be substantial. Its not hedge fund territory, but certainly obscene by Main Street standards.

And mutual fund managers want it all.

Big houses. Expensive cars. Women with pilates-sculpted buttocks.

And perhaps most of all...respect.

But they ain’t gonna get it here. Particularly if they end up in the bottom quartile of their peer group.

Hacking your way through Wall Street is bush league . Around here we have a name for these losers and their minuscule bonuses.

Spaulding.

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