Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

The building that houses Citadel Investment Group LLC, cente
The building that houses Citadel Investment Group LLC, in Chicago, Illinois. The hedge fund company posted solid returns for investors earlier this year.
Bloomberg via Getty Images

Many hedge fund managers have reason to cheer even as their investors grouse about lackluster returns; they are on track to reap a much larger payday for 2016 than for 2015.

"There have been a lot of reports about hedge fund compensation being down this year but that is misleading," said Adam Zoia, chief executive officer of Glocap, the largest investment management search firm which tracks hiring and pay in the hedge fund industry. "The headline here is that pay is up for star performers this year."

And the jump is expected to be large, according to the 2017 Glocap Hedge Fund Compensation Report which was reviewed by Reuters.

At top performing funds, investment managers' bonuses are on track to be up as much as 11 percent. Portfolio managers at poorly performing funds will see bonuses shrink by as much as 7 percent, the report said.

Hedge funds became famous more than a decade ago for delivering eye-popping returns, but more recently the industry as been criticized for its high fees and low returns, prompting many pension funds to pull money out.

Even as the average hedge fund is earning returns only in the low single digits, portfolio managers at the best performing funds are likely to earn 6.6 times more than those at the industry laggards, the data from CompIQ show.

The strong jump in compensation is being fueled by a wider spread between returns this year. The top performing one-third of funds are boasting gains of roughly 15 percent. The bottom one third are nursing average losses of 7 percent. A year ago the top third was up only about 4.2 percent while the bottom third was off about 4.2 percent.

"Last year there was a much tighter range," Zoia said.

Hedge funds have long paid extremely well with the 25 best-paid hedge fund managers earning $13 billion last year, Institutional Investor's Alpha's 15th annual ranking of the industry's highest-earning managers show.

With more sluggish returns this year the conventional wisdom was that pay would shrink at a time some firms have laid off staff and trimmed spending on employees to save.

The data show this is not true. Since hedge funds charge a management fee and take a portion of gains, analysts say there is still enough to pay and that firms will have to pay up to keep their best staff.

"The feeling in the industry is that it is hard enough to make money, so if you make me money you will be very well taken care of," Zoia said. (Reporting by S