Tech vs Hedge Funds

What do you guys think about tech vs hedge fund quant jobs? It seems to me that at least in the past 10 years, the promise of hedge funds isn't paying off. Tech is starting to pay better and better and better and the exit options are way better than a fund. The sun seems to be setting on the Wintons, the AHLs the Brevan Howards, the GSAs, the GAMs, the BAMs, etc. It seems to me that the idea of hedge funds - a few smart people with an edge in some area making money and sharing the profits is no longer valid. If anything a tech startup seems to be truer to this idea than a hedge fund (even the startup ones).

 

Deepmind is no longer lucrative. Not sure what you mean by 8 per share. Stock bonus is in google bucks.

Citadel london actually pays less than USA, and over here PhD FAANG on west coast is comparable to a mid-level quant without PnL linkage.

The other names all pay well because they are in niche spaces and really good at what they do, for now. Curious, you didn't mention G research, are they not very big quant fund over there? Or do they not pay very well?

 

> Not sure what you mean by 8 per share.

I meant Snap when it was 8 per share. Know couple of persons who got there and got stock bonuses priced at 8. Now Snap is 25.

> Deepmind is no longer lucrative

What do you mean? Have an ex-colleague joined last year, the comp is higher than FAANG in London and compares to quants.

> Curious, you didn't mention G research

Just forgot about G-Research (and probably there are couple more names that I forgot). They also pay well.

> Citadel london actually pays less than USA

This is generally true. But still higher than almost everything in London for techies.

 

I'm not sure if this is a valid comparison. I realise that to have a valid comparison we need to get into statistics, but last time I was moving jobs, I was shocked at the low pay in some of the funds (£80-90k) who also have poor performance so the idea that they'll compensate with a bonus is admirable but laughable. It was even lower than banks where I was looking at 130-150k + bonus.

Meanwhile tech companies started coming out with 120k job offers.

Yes, perhaps some of these places could pay that much for techies but these are far and few in between and the exception rather than the rule.

 

Any knowledge on pay in some other London-based firms that are less commonly mentioned, i.e. Qube, Marshall Wace, Squarepoint, Maven?

 

Well it really depends. It's more of a lifestyle choice. Tech is definitely an easier path to take compared to quant funds. I know people that work 10-4 at FAANGM and make around 180k all-in after school. However, I also know people at quant funds and prop shops that make over 250k right after school. In tech, you have the option of being content and staying a senior developer/swe, but in quant funds you have to perform.

 
Most Helpful

This conversation happens every few months (maybe weeks) on this forum.

HFs are higher vol with higher upside. If you are good (ok maybe great) and have some luck (as teams can get cut due to poor senior people, etc) you will do better at a HF. The strong players in that industry continue to be strong and attract assets, clients, and fees.

Tech (outside of startups) is lower vol, lower ceiling, but better lifestyle and stability. If you are good/great here you’ll be capped lower (ignoring the complete outliers) and it is less meritocratic. You will rarely see a 30 year old in tech making $2-3mm. While also rare in HFs, when you have direct PnL it becomes easier to argue for this.

Of all the people I know, the highest earners are successful at funds, prop firms, or similar. The tech firms are good, but a noticeable difference in pay.

That being said, I’ve never had a friend or acquaintance fired from a tech firm, very different story in finance.

 

PLenty of people have been fired from tech. Amazon is infamous for putting SWE on pip as an excuse to reduce headcount.

30yo on 2-3MM is unheard of in tech, unless your name is Ian Goodfellow and he was at the right place, right time with deep learning taking off. There are maybe less than 10 people on a similar level.

However, even in hedge funds this is extremely rare. Its the equivalent of a very successful PM running a small 200MM book. And outperforming every year. Not to mention career risk, I've seen way too many analysts that think they know what they're doing, go to citadel and last

 

Yes on the amazon side, I’ve seen less so on others but I can believe that.

On the comp side on HF, yes you need to be a high performer, but it is possible and have seen many cases.

As I said originally if you are very good in the HF space you won’t be leaving for money. I’ve had technology firms (FAANG) reach out and the ranges don’t get close (30-50%) at their senior levels.

 

This is exactly my point. 2-3 million end of year comp is almost unheard of EVEN if you're linked to PnL. I'd love to see the maths behind this comp number - I could be wrong.

The firing part - I don't think tech is as safe a job as most people think. Due to differences in the nature of both businesses I believe firings happen in a different way. You can imagine a HF having several bad years and just down-scaling and waiting for more favourable market conditions when your signals return better results. Not something you can do in a tech company. Ultimately, a tech company will also get compensated for any work even during recessions etc.

 

Citadel Sec is doing well, all the names you mentioned are market makers. And to support OP's original point, actual SWE on cor engineering at these names are pulling in 500k+ which is comparable if not more than quants. In fact I would say except for the extreme right tail the distribution for SWE dominates that of quants if you include positions at market makers.

 

Et magnam delectus ipsa quasi rerum tempora sit. Nihil tempore est et rerum omnis cumque.

A quae similique aperiam architecto ipsum hic voluptas. Inventore sed ut sequi vitae molestiae voluptate suscipit. Sapiente et cupiditate sit est exercitationem at neque aut.

Career Advancement Opportunities

March 2024 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • Magnetar Capital 96.8%
  • Citadel Investment Group 95.8%
  • AQR Capital Management 94.7%

Overall Employee Satisfaction

March 2024 Hedge Fund

  • Magnetar Capital 98.9%
  • D.E. Shaw 97.8%
  • Blackstone Group 96.8%
  • Two Sigma Investments 95.7%
  • Citadel Investment Group 94.6%

Professional Growth Opportunities

March 2024 Hedge Fund

  • AQR Capital Management 99.0%
  • Point72 97.9%
  • D.E. Shaw 96.9%
  • Citadel Investment Group 95.8%
  • Magnetar Capital 94.8%

Total Avg Compensation

March 2024 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (23) $474
  • Director/MD (12) $423
  • NA (6) $322
  • 3rd+ Year Associate (24) $287
  • Manager (4) $282
  • Engineer/Quant (71) $274
  • 2nd Year Associate (30) $251
  • 1st Year Associate (73) $190
  • Analysts (225) $179
  • Intern/Summer Associate (22) $131
  • Junior Trader (5) $102
  • Intern/Summer Analyst (249) $85
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”