Hello AM people here.
Recently I landed two jobs, and I have to get back to them end of coming Monday, any advice is appreciated.
#1: boutique family office, equity analyst role, the office has other investments (PE, real estate, etc, I don't know how large these are) but the firm just gets started in public equity and plans to start deploying about 30-50M (purely family and friends' capital) Q1 next year. I will be the only analyst helping a seasoned PM, who spent most of his career in the quant side, a bit in fundamental as well though. The downside is, at end of day, it is a newly launched small fund in a small firm, lacking track of record, exit options (whether the experience is recognisable by larger firms), mentoring (it will be mainly active fundamental investing, however, PM primarily worked in quant investing before), so there are lots of concerns/risks but mainly on the scale, platform and track record. The AUM is expected to grow once there is some performance down the road and they will start fund raising externally for this one as well. All I can say is the founders and their family are quite powerful and influential, so essentially during the first year or two, PM and I are managing their family and friends' money. This will be a generalist role (of course, being the only analyst)
#2, middle office corporate credit risk role with a giant global bank, just to be clear, this is not a front office corporate banking role. The team basically reviews loan transactions that corporate bankers bring in and run their own analysis on various metrics to see if it fits into the bank's overall policy and risk appetite. Also will spend lots of time doing annual reviews of outstanding loans, similar to what credit rating does. This is a very stable job which my wife really wants me to take, though still junior, got a nicer title "AVP" (she likes that a lot, so far will be my first role with a "VP" in it). This is also a role where lots of credit rating people chose at some point.
#1 pays a bit more
Background, CFA, 2 years of sell side equity research associate, then 3 years of senior analyst with a major credit rating agency. Long term goal: honestly, I don't know, happy with corporate bond or equity analyst in a larger AM, but at the same time. personality-wise, I am not a risk-taker (neither is my wife), and I haven't worked or even interned with a smaller company like #1 before, though financially, I can afford the risk of taking role #1 even they go busted.
Too much said, appreciate your thoughts, also if you have any questions, PM me or leave a comment.
Thank you.
don't know why the font gets so big at my end, sorry if it offends anyone, first time poster
Congratulations on the offers. Is there anything keeping you from staying in your current role longer? You can continue to recruit until the right opportunity comes up. Not sure if something like ratings advisory (most investment banks have this), FI LO AM or sell side research would be possible with your background.
Role one seems pretty iffy in my opinion. A lot of “ifs” and the PM doesn’t come from a fundamental background. Also, it’s weird that future fundraising is dependent on performance and would come from outside investors. Sounds like any other hedge fund and unless the family is connected to alternative investment world, not sure how they are going to help. Family offices (or even multi family) can be an awesome gig, but this doesn’t sound like one. Additionally, the amount of capital is pretty small. The economics don’t make sense—you need a lot more capital for a family office to make sense. By the time they pay the PM (I would figure 7 figures if he/she is legit), you, Bloomberg terminal, etc, you need to outperform significantly to justify the cost over passive or just going to GSAM/JPM. There are a lot of red flags here and unknowns. Are you getting carry or something to make the significant risk worthwhile? Regarding credit risk options, I am not so sure. I interned in credit risk for a BB and the role seemed like it offered a good balance of pay and hours at the senior level.
Anyway, do what is best for you and I wouldn’t put too much weight in what I or anyone says on here. I’ve only been in the industry for two years so there is a lot I don’t know. The family office could be an incredible growth opportunity, but you just need to do a lot of diligence on it. Based on the post here, there are a lot of red flags.
Edit: Also curious what type of strategy you would be running? Especially given the PM has a quant background and you mentioned an active fundamental approach? How is performance or success measured? With two people who are both relatively new to fundamental investing, I can’t see it being possible to have more than a dozen high conviction ideas or to have knowledge of multiple sectors. Maybe you just take a macro approach and overweight certain names and sectors and underweight others? Fundamental investing is a research intensive and highly collaborative process. Two people could spend a year just researching a vertical of the healthcare sector. Not trying to be negative, but this is something I would want to know if I was considering the role. S&P500 would be a really broad benchmark for two people to invest against
thanks for the inputs, really appreciate that. I share all the concerns you have for the #1, it will be thematic equity. Honestly I don't know how that works out at this moment, but basically as long as we identify some certain sectors or fields that could have some opportunities, we pick a few companies that could benefit from that, and dive into it. PM will also look to see if they meet certain "quant" criteria. But yes, you are right, it is very small and lack of resource. Though I am able to create detailed models fairly quickly, I am very new to the investing world as well, and much of the things will be on my own.
Makes sense. Not trying to be negative, but there are a lot of red flags (or maybe we can call them points of further diligence). It’s hard to see how the economics work out here and if the family is just tipping their toes given the recent market performance. There are a lot of ifs and a lot that needs to go right for this to work (some internal and some external factors beyond your control like market performance, fundraising environment, etc). The plan is barely beyond the stage of an idea and you would be taking on a lot of career and development risk, so seems like you should have some sort of the carry or the upside. The flip side is that if the market and the fundraising environment remain strong and your performance is extremely strong, you can be the second employee of a growing fund. But then again I don’t really understand the structure here—is the intent to be a family office or to be a hedge fund changing 2 and 20 (more like 1 and 10)? Do you get a cut of PnL? Personally, I don’t see any way option 1 makes sense unless you get to share in upside and are okay with the inherent risk.
FWIW, I just joined a very large LO AM firm in a research / investment role. I personally don’t see how active fundamental investing would be possible with two people. We run pretty lean, but the process is still extremely research intensive and highly collaborative. Ideas are debated across multiple teams spanning a range of sectors, styles and asset classes. There are a lot of intangibles in the investment process that are difficult to replicate.
Personally, I believe that the investment profession is an apprenticeship model as well. Everyone has their own philosophy, and there’s a lot to learn from working with experienced professionals that are willing to mentor newer investors.
With your current role and background, seems like you should be able to remain in the job market and wait until the proper offer presents itself. Nothing is forcing you to take one of these two offers tomorrow.
Again, this goes without saying, but do what is best for you and your family. There is a lot that I do not know about the offers, your background, and the industry in general. I wouldn’t put too much weight on my opinion.
This seems like such an obvious choice to me, the fact you don’t know the right answer coupled with the fact you don’t know how to post in normal font makes me wonder how you’ve survived as an adult.
Take the family office job or toil in mediocrity forever.
And tell your wife she doesn’t get to decide your career moves when she clearly has no idea about risk vs reward.
Thanks for your very straightforward opinion. But this is a 50M new fund working with a quant PM that makes transition to fundamental, there won't be carry or equity for me, and clearly current AUM won't be economically sustainable, and I don't think we have the pedigree as those Fidelity guys to quickly expand AUM to a large amount. I agree with you on the downside, I can always get back to #2 or equity/credit research if #1 does not work out.
Mind sharing ballpark what the comp looks like for option 1?
Start at SFO, learn about every asset class, transition to MFO that will actually pay you.
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