Best Job to have prior to becoming a Hedge Fund manager?

There's many paths. I think the most common are:

Investment Banking (M&A preferred) --> HF Research Analyst --> Portfolio Manager --> Fund Manager

Equity Research --> HF Research Analyst --> PM --> FM

S&T (Traders preferred obviously) --> Junior/Assist Trader at HF --> Trader --> Head Trader --> Fund Manager

Now, skill wise, I think the best HF managers are traders and ex investment bankers. Hate to say but ER is boring (for me)

Hope this helps.

Depends a lot on the type of strategies the fund is into I think.

Gotta be a pm at some point. Traders don't (typically) have the asset allocation, fsa, etc skills that are required of a fund manager.

you have to have a job at some point where you get to work with and observe a good portfolio manager. I was lucky enough to work with and observe several really respected traders/pm's and many that werent good and I learned alot from both categories.

Institutional sales seems to be a decent way (in theory) to move to the buyside??

Your job is basically to network with PMs and tell them your views on the market and your investment ideas. Surely that would position you well for the move??

I would say 90% of the time when we get "idea" calls from salespeople they're just trying to offload desk inventory, not providing real investment ideas.

Agreed Kenny.

I always say that sales is a good training route if the HF manager role includes capital raising. From what I've observed, it's one of the better ways to raise the salary pool of the firm.

Pre-dodd frank, proprietary trading at a bulge bracket bank was probably the best route into hedge fund PM positions.

The best path, excluding being PM at another fund, is probably to come from the sell-side in a strategy position while carrying prior portfolio management experience at a more traditional firm, preferably institutional-side, and therefore carrying trading/PM skills, track record and institutional contacts.

I don't think sales/flow trading type of experience will put you in the shoes of a PM on your next job. Traders that moved to hedge fund PM type of roles were mostly proprietary, or managed significant proprietary risk, which will probably not be the case for any flow trader going forward.

Sales guys tend to stay sales for life. It can put you in a fund marketing/relationship management position but will rarely help you move into a PM role.

It does indeed depend on the type of hedge fund you want to go to.. The most straightforward seems to be:

Equity Research --> HF Research Analyst --> PM --> FM

if you're very good at your chosen sector/niche as then you can get a carve out somewhere, which is how most multi-strat funds work. Of course, those funds are mostly sweat shops and you'll get stuck in your specialisation, but if you enjoy it..

The perception of sell-side strategy has started to go up dramatically given current market structure/cross-correlations. I'm considering moving from being a hf pm over to the other side to try something different, sounds interesting going around the world pontificating..

My goal is:

IB M&A --> HF Research Analyst --> PM

I'm sorry for bumping an old topic, but: S&T → HF Manager, is no longer the norm?

It really depends on what shop you're looking at going to. If you specialize on a specific product in S&T, then that's all you have experience with. For a L/S fund, you need to have experience with accounting and really understanding business models. Most of that comes with CF roles and some ER, though its less intense.

Traders make better PMs and fund managers than ex-bankers. In fact I don't think the analyst route prepares you for the PM role at all. The skillsets are completely different. Over the years, analysts become conditioned to thinking long-term, taking their time in analyzing, being comfortable to hold a stock after it plunges 30% because in theory they believe the intrinsic value is in tact, etc. When you're a PM though, it's a different ballgame. It's about timing (entry and exit), weight allocation, thinking about macro, hedges, etc etc. I don't see how an analyst role preps you for that. It's also a lot more fast-paced and you need to make many decisions in a given day while staring at 4 bloomberg screens. You never have to do that as an analyst and therefore will not be conditioned for it.

Traders make better PMs and fund managers than ex-bankers. In fact I don't think the analyst route prepares you for the PM role at all. The skillsets are completely different. Over the years, analysts become conditioned to thinking long-term, taking their time in analyzing, being comfortable to hold a stock after it plunges 30% because in theory they believe the intrinsic value is in tact, etc. When you're a PM though, it's a different ballgame. It's about timing (entry and exit), weight allocation, thinking about macro, hedges, etc etc. I don't see how an analyst role preps you for that. It's also a lot more fast-paced and you need to make many decisions in a given day while staring at 4 bloomberg screens. You never have to do that as an analyst and therefore will not be conditioned for it.

Didn't -1 you, but wtf are you talking about? As if there is one way to run a HF?