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2013 Business Expense Benchmark Survey
to operate with fewer resources. In total, U.S. firms
have 32.8 heads, of which 18.9 are focused outside
investment management.
Average compensation per head for investment
support and business management roles also
continues to lag in APAC. On a per-head basis, our
model showed that APAC hedge funds were only
paying $129,320 versus $189,557 in EMEA. In the
U.S., there is a sharp jump in average compensation
that takes place at the $1.5 billion AUM mark; this is
where many organizations begin to hire professional
operations and investor relations teams. This boosts
their average per-head compensation expense
to $316,495.
APAC firms with $1.5 billion AUM also pay much less in
third-party expenses than their peers in other regions.
Our model shows these firms registering a total third-
party spend of 10.8 basis points. This is lower than
in the U.S., where the total is 12.7 basis points and
substantially less than for EMEA firms, where the figure
was 20.9 basis points.
Chart 33 shows the breakdown of combined
compensation and third-party costs by category.
There is not the same across-the-board difference
in spend for APAC firms at $1.5 billion average AUM.
Expenditures on risk and compliance are on par with
those being registered in the other regions, and
outlays on operations and technology are only
modestly lower. The big differences in spend are
focused on marketing and in business management.
For marketing, APAC firms at this AUM level are
spending only 6.4 basis points across compensation
and third-party expenses compared to 9.2 basis points
in EMEA and 8.3 basis points in the U.S. Business
management expenditure gaps are even larger,
although it appears that there may be some missing
data points; APAC funds at 1.9 basis points had no listed
third-party expenses. This compares to total basis
points of 12.8 in EMEA, 5.3 of which were related to
third-party expense and to total basis points of 9.8 in
the U.S., of which 6.1 were related to third parties.
Chart 33: Relative Management Company
Expenses: $1.5 Billion Fund
0
$2M
$6M
$7M
$8M
$9M
38%
US
EMEA
APAC
$7.57M
$8.44M
$8M
-39%
Source: Citi Prime Finance. U.S. dataset reflects 16 firms with $26 billion AUM.
EMEA dataset reflects 8 firms with total AUM of $12.7 billion.
APAC dataset reflects 4 firms with total AUM of $5.1 billion.
$5M
$4M
$3M
$1M
$4.88M