Base salaries for hedge fund and mutual fund managers are projected to increase 3.5% and incentive pay is projected to rise by 0-10% from 2011 to 2012, according to a new study fromGreenwich Associates and Johnson Associates.

On the mutual fund front, incentive growth in fixed income is projected to outpace that in equities in 2012 due to the flow of funds into fixed income and the uneven performance of equity funds, according to the study. In equities, portfolio managers can expect their base salary to increase in 2012, coupled with incentives that are flat to just 5% higher than 2011 levels. Fixed-income PMs can expect slightly stronger growth in incentives, with increases projected between 5% and 10% from 2011 to 2012.

“Those results reflect an industry that, like the economy and financial markets in general, is slowly regaining strength but lacks conviction and awaits a more robust recovery,” stated Greenwich Associates analyst Kevin Kozlowski.

The study also reveals that demand for fixed-income talent to continue outpacing demand in equities for as long as current market conditions of historically low interest rates and a start-and-stop economic recovery remain in place. However, when an economic recovery begins to gain steam, hiring and compensation growth should begin to even out as equity PMs see pay levels climb in step with stronger inflows and overall AUM growth.