Compensation at asset managers seen down 5 percent: report

NEW YORK (Reuters) - Compensation for traders and fund managers at asset management firms are expected to fall 5 percent in 2015 from year-ago levels as recent market volatility has hurt investment returns as well as the salaries and bonuses linked to them, a report released on Wednesday showed.

"This would represent a dramatic shift for an industry that had, until recently, experienced strong asset growth and a steady demand for talent," research firms Greenwich Associates and Johnson Associates said in a joint statement.

In 2014, bonuses at asset managers or "buy-side" firms, were flat to a tad higher than levels the year before, which missed expectations for a 5 percent to 10 percent increase.

The average compensation for stock fund managers last year was about $690,000, with 65 percent in the form of bonus and the rest in salary. This was flat from 2013 levels, the firms said.

Their bond counterparts, meanwhile, earned 27 percent less in 2014 at $504,000 with 60 percent from bonuses. Their compensation has "held firm" annually at levels not seen since 2005, the research firms said.

Buy-side traders took home less than fund managers, but saw annual increases in 2014, according to the study.

Bond traders' average compensation rose to $325,000 with slightly more than half their pay from bonuses, while head stock traders' compensation grew from 2011 to 2014, without citing a specific figure, the report said.

Fund managers and buy-side traders might face further declines in compensation in 2016.

"As performance lags and asset growth slows, we do not expect firms to alter compensation structures to deliver increases or even maintain current levels," Francine McKenzie, a managing director at Johnson Associates, said in a statement.

While traditional asset management firms are expected to struggle as markets turn more volatile in a slow-growing global economy, the research firms said hedge funds may benefit from investors seeking higher returns, which should help buttress compensation for hedge fund professionals in 2016.

(Reporting by Richard Leong, editing by G Crosse)

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