Hedge Fund Industry in Chicago - growing or shrinking?
I'm a late 20s analyst in systematic strategies (risk premia, alternative beta) at a fund in NYC. I'm considering moving to Chicago due to the increased affordability and viability of raising a family in the city proper. However, I'm concerned about the breadth of opportunities in Chicago and whether the city's hedge fund industry is growing or shrinking.
Outside of Magnetar, Balyasny, and Citadel (whose NYC headcount keeps growing more than Chicago's), I don't know of any other non-prop shop firms in the city with quant funds. I understand that nowhere will have the number of opportunities as NYC but I don't want to potentially be stuck in a job because of a dearth of options.
For those with relevant insight, what do you think of the current and future breadth of Chicago's hedge fund industry - particularly the quant side?
Which quant funds in Chicago may I have missed and what are their strategies?
Thanks in advance.
MLP is also in Chicago, but if you're doing exchange traded stuff, then why can't you go to a prop firm?
Another option is California's asset managers, but I hesitate on having kids anywhere near SF.
Curious why you say the SF part? Real estate prices?
it's a failed state
too expensive and I don't want my kid to be corrupted by pyscho techies.
Who the hell goes to SF from NY with a cost justification?
SF is great as long as you don't mind even higher prices than NYC, constant cold weather, more homeless people, literal shit everywhere, hipsters, smoke from wildfires, techies busy blowing smoke up their own asses, taxes out the wazoo, poor dating prospects for men, crappy public transportation...
I miss anything?
Because it's a liberal dumpster fire where you'll be taxed into oblivion, force fed intersectional drivel, and you and your kids will probably get accosted by some homeless smackhead after you accidentally step in his shit and needle pile?
That's not even touching the real estate bubble and corrupt government misappropriation of said taxes. If it wasn't so appalling it would be funny how much money they waste on self-inflicted problems and cause them grow at a rate that would make even the hottest SV startups blush.
Prop shops seem to focus more on intra-day strategies and market making which lend more to quant developers, which I am not, moreso than quant analysts. I also don't have much desire to run intra-day strategies. If I am mistaken in this assumption, I'd be happy to be corrected
If you're worried about NYC raising a family, I'm not sure Chicago is a better option to be honest.
Have you checked out hedge funds in CT-Greenwich area?
Magnetar is in Evanston IIRC.
The secret to Chicago if you have kids is to live in the suburbs. Or send your kids to Lincoln Park High School. LPHS is the CPS exception that proves the rule, and really ought to be part of the north shore.
Train ride in from Winnetka is ~40 minutes IIRC. You save 7 minutes if you catch the express.
LPHS is not a great school. If you're able to get your kid into one of the selective enrollment schools you'd be in much better shape
This isn't a secret. Anyone living in the state of IL knows this.
Chicago is considerably more affordable than New York. Wouldn't mind working in Greenwich but living there is another story as it's not a very diverse area (as are most places in southern CT). The main sell of Chicago is that I could get a diverse urban lifestyle at a fraction of the cost, albeit with some concessions relative to New York
There are a lot of spinouts from Citadel (mostly small) that have popped up in recent years and there are a ton of prop trading shops around the city that have a use for a quant. I would say the growth has been steady but the opportunities aren't overwhelming by any means.
Sorry I'm not answering your question, but "increased viability of raising a family in the city proper"... are you serious?
I get that affluent areas are generally shielded from this, but the city's murder rate is out of control. What are you comparing against when you make that claim? Caracas? Baghdad?
Yes but everyone knows its a tail of two cities. I have never once heard anyone complain about Chicago crime until we had these riots.
Club Cuvee and bottled blonde brought some shootings in river north but that was basically the only crime till the crazies came out out lately.
I don't disagree with you, but it's he that's talking about "increased viability", i.e., things are better than before. In the middle of the pandemic. With riots etc. Again, what time in history is he comparing against?
Chicago is great and I love living here relative to NYC (I liked NYC too). Don't listen to all the nonsense about the crime. It's quite concentrated. You're very unlikely to be a victim of a serious crime if you are not affiliated to a gang. Chicago is a solid place to raise a family in a big city at a lower cost. Depending on where in Chicago you live, many of the public schools are of high quality. There are also some magnet school options that kids can test into for middle school and high school I believe. Also, if you decide to live outside the city there are plenty of very affordable suburbs that are convenient for commuting into the city.
LSV Asset Management and Ativo Capital Management are two quant firms in Chicago. LSV is a quant value shop that mostly hires PhDs in finance/econ. Less so from other STEM fields. The founders are from Booth. Most of their assets are in long only though. There's a bunch of other systematic long only shops as well. There's a group within UBS Asset Management and some others I forget. For purely market neutral stat arb, that will be more limited to the funds you already mentioned plus a few of the prop shops run such strategies too.
Thanks for the insight - very helpful.
As a quant, do you ever get the feeling that, were you to leave your current job, the pickings would be slim?
Also, compared to New York, do you feel as though the decreased competition compensates for the narrow breadth of options?
Not specific to the question but do you have friends or family in chicago? I would also like to move there but have zero contact.
I do not have any family there, nor do I have any network. My gf does have family close by
Alyeska Investment Group is in Chicago. Looks like they take a concerted effort to make the firm opaque to outsiders, and it might be near impossible to break in. They manage ~$6 billion. I welcome anyone to comment on this firm if they have any info to add.
Started by former citadel guy. Multifactor risk model like other MM, except not a true MM in the sense that AFAIK it's single team/PM per sector. They also have an event team.
Desirable seat as compared to citadel?
A lot of those prop trading shops in Chicago have been opening slower desks (by slower I mean hours to days holding periods) on the quant side that you can lateral into with the right skill set if a HF gig does not work out. However, the nature of work is still quite different (often more implementation than research focused) and seems pretty far off from the kind of work you're doing currently (it sounds like you're in factor land).
There is no hiding that the opportunities in the quant fund space is fewer in Chicago (though maybe it is still second after NYC?). Trend wise Covid probably helps add some flexibility, but like you mentioned Citadel and others are definitely on their way out from Chicago and the factor based people (e.g. LSV) have fallen out of favor on poor performance over the last few years / are facing downward pressure on fees. I would probably guess it is overall worse than 5 years ago, cost of living wise Citadel Chicago used to be a nice arb, where any pay diff based on location was not really observable, but nowadays esp. with the higher turnover you pay for it by having fewer alternatives.
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