I'm sure this has been covered in previous threads, but I didn't see anything recent so figured I would start something new.
I'm currently in a 2 year banking program a BB in a top group and have been recruiting for HF opportunities for the past few months. I've been fortunate enough to land offers at 2 places (I may create an additional thread asking for thoughts on A vs. B) and am currently working to diligence the 2 places as best as possible to figure out which makes most sense. As limited background, neither are your large particularly well known prestigious funds.
Aside from the general risk associated with joining a HF in general, what are the biggest career risks of leaving a banking program early, and would those both in the HF industry and who have recently joined it recommend doing so? Furthermore, how selective should one be in evaluating HF opportunities coming out of banking? Recognizing that many IB analysts recruit and end up with nothing, should I approach it as a "take whatever offer I can get" sort of thing or be more patient/selective given the obvious risks importance on my career. Any thoughts are appreciated.
Prioritise learning, responsibility, career progress, and stability when evaluating HF offers out of banking. Obviously don't short-sell yourself on comp but the other factors are more important.
Learning / responsibility: what will your direct team structure be, who will you be working with, day-to-day responsibilities, how long do you expect to work there until you get to start contributing to / generating ideas that go into the book Career progress: does the fund have a history of promoting people internally, how quickly could you move up the ranks, where have people exited to Stability: how long have the partners been at the fund, history of AUM progression, historical performance, fee structure, how long has the fund been around, how diversified/sophisticated is the investor base
Don't think there are big career risks to leaving banking, it's fairly easy to get back in if you change your mind further down the line. As to how selective you should be, as long as the role is good enough (decent AUM, not going to shut down within 6 months of you joining, decent opportunity for learning), then take the offer. Sweet spot for recruiting is 2-3 years banking experience and if you hold out past that, it can become a lot harder because you can potentially end up being perceived as damaged goods.
Thanks for the reply, and I think those are a lot of good points. I'm just finishing up my 1st year of banking, for what it's worth, and I would be leaving for an immediate start.
If you don't think that these are great matches and do think you can get to a more "prestigious" fund, I would wait. There's no real concrete pro or con to leaving after 1 year vs 2 years...it's about where you go to, and whether it will be the right place for you.
It's hard to do this because the headhunters are vultures who will pressure you really heavily to accept an offer so that they can collect their commission check and move on to the next person.
Fwiw, there are real advantages to going to a tier 1 fund early on in your career, though obviously it is not the end all / be all.
What are the advantages of going to a "tier 1" fund?
Do you think there could be advantages to starting out at a smaller, lesser known fund (think Tiger spin off with 500mm to 1bn in AUM) versus one of the bigger, brand name funds (Point72, Citadel, etc.)?
Would appreciate your thoughts on this since I might be making this kind of decision in the next year.
Advantages are somewhat straightforward:
The biggest advantage of going to a small fund is that you get to hope that the fund makes it big eventually and since you were in the door early you make it big too. Personally it's not my favored risk / reward but many people obviously think it's a great option (though again, I know people who after starting at a small fund have never been able to be hired at a larger one).
Bump - would appreciate any additional thoughts on this
I think you would get much more replies if you make "A vs B vs top BB thread"
delete. My comments are getting cut off after a few sentences. Dunno why
delete
Do you mind sharing base comp ranges for someone with 2-3 years banking w/e that is moving to a HF (you).
a.k.a what the ranges you are hearing ...
I would say for a non name brand fund in the $600MM-$1.5Bn range, 200-250k all in would be reasonable to expect. Basically 100-125k base and 100% bonus. From what I've heard, anything sub 100k base should be seen as a red flag for a fund of this size (makes sense given 2nd year IBD analyst salaries are now 90/95)
I had an offer at one of those multi-managers and don't recommend them. You're not learning real public investment skills or doing much proprietary research. You play quarters (pressure to find inside info) and the market neutral pairing strategy (long burger king, short mcdonalds) is about capital preservation of billions, rather than actually trying to find the 5x-10x baggers and/or real long term winners i.e. a Transdigm.
You're basically investing to earn your 2% rather than your carry. That's a fine strategy once you have that much capital, but it's not where I want to start off and learn how to be a real investor.
Oh and the short term outlook is really annoying for me. Once you share ideas at a HF analyst event/dinner you'll realize how little some analysts know about the companies they invest in.
Investment banking to a hedge fund (Originally Posted: 12/22/2014)
I know I am probably going to be given alot of crap for this post. But I am seeking some advice. I recently graduated from my masters program in accounting and got a job as a fixed income research analyst at an investment bank. I would like to make my way to become and investment banking analyst, and then make my way to a hedge fund After investment banking, what type of role should I look for or expect to look for at a hedge fund if I want to learn more about the industry> Thanks for the help Dan
If you're in FICC research, why in fuck's sake would you want to go into IB? Plenty of ops for credit analyst.
Stay where you are, do some good FI research, make good trade recommendations (and keep a mock portfolio), and you'll find your way to a hedge fund. How does doing due diligence on bonds, selling securities, or underwriting securities in IB help you become a trader/PM at a hedge fund?
Thanks ThinkMacro. I currently have a manager that does not really give me a chance to make recommendations and investment thesis. I am essentially data entry now and make financial models for him to make his own recommendations. Thanks for the insight. It is appreciated.
You are still learning... most sell-side equity/fixed income associates are not generating/publishing ideas. Most HFs don't expect their new analysts to generate ideas in the first 6/12 months BTW.
Thanks SFT, I appreciate the input and information
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