The ballooning pay packets of the world's top hedge fund traders have hit the stratosphere with some salaries now topping a billion dollars, but fears are mounting about an industry bubble.
Snapping at the heels of the elite are dozens of money managers -- working in New York and London -- who banked hundreds of million of dollars in pay, according to an annual survey by Trader Monthly magazine published last week.
The identities of those who have gained entree to the billion-dollar club through running a hedge fund, in essence a secretive capital pool, are not household names, and many members prefer it that way.
The top five hedge fund managers earned 10-digit packages in 2006 while 93 other traders banked an average of 241 million dollars, the Trader Monthly survey found.
"Compensation for hedge fund managers has exploded as more investors have invested in hedge funds," observed Rea Hederman, an economics expert and senior policy analyst at The Heritage Foundation.
Hederman said investors do not seem to mind the huge salaries taken by managers of funds that perform well, but said some "hedge funds have not delivered the returns that the investors might have wanted."
The secretive nature of hedge funds adds to their allure, but fears about insider trading and a lack of regulation have sparked congressional hearings into the trillion-dollar industry.
Concerns that a major hedge fund collapse could topple a major bank or banks and trigger a wider run on the US banking system are also giving some lawmakers headaches.
The implosion of the Connecticut-based Amaranth hedge fund in September with six billion dollars in losses increased such worries.
And despite the perception that hedge fund investors reap lucrative returns, market data appears to show that stock market investors can fare just as well in the financial jungle.
In 2006, the average hedge fund return to investors was 11.99 percent, according to the HedgeFund.net website while the broad-market Standard and Poor's 500 index posted a gain of 13.62 percent, according to Thomson Financial.
Some market observers fear too many investors are piling into hedge funds chasing a gold rush that could fuel a market collapse.
"This is only one more indicator of how far the bubble has expanded, how investors have rushed into hedge funds and private equity and other equity products," said Alan Johnson, a director of Johnson Associates.
"It's exactly reminiscent of the tech bubble of the late 1990s, early 2000s. To some degree, it's madness," Johnson said, adding "we believe the bubble is going to burst at some point."
But for now top earners cited in the Trader Monthly survey, such as 33-year-old former Enron trader John Arnold who runs the Texas-based Centaurus Energy fund, are sitting pretty on mountains of cash.
Arnold, who grabbed the top spot in the rankings, received an estimated 1.5 billion to two billion dollars last year, the magazine said. He has reportedly overseen staggering returns of 317 percent, largely due to massive bets on the price direction of natural gas.
Despite coveting anonymity, Arnold and his associates seem proud of their bulging wallets.
"Traders get paid in cash. It's liquid. It's real. You can go, 'Here, look,' and slap someone across the face with it," one of Arnold's associates told Trader Monthly.
However, as seasoned Las Vegas gamblers well know, a player can be up one minute and down the next.
Brian Hunter, a former high-earning hedge fund trader who previously made Trader Monthly's list, was missing from this year's table.
US media reports have said Hunter was largely responsible for Amaranth's melt-down, tied to a series of disastrous energy trading bets, although Hunter is now reportedly trying to set up a new hedge fund.
