Boutique LO AM (T2/3) vs MM IB

Based on the most helpful WSO content, here's how you can think about your options:

1. Boutique LO AM (Tier 2/3):

   • Pros:
     • Direct exposure to public markets and investing, which aligns with your long-term goal of being an investor.
     • Opportunity to develop fundamental research skills, which are highly transferable to hedge funds, especially in long/short equity.
     • Smaller teams often mean more responsibility early on, and you may get to work closely with portfolio managers.
   • Cons:
     • Limited exit opportunities compared to Tier 1 AMs or IB.
     • Slower career progression and compensation growth compared to IB or hedge funds.
     • If the firm is not well-known, it might be harder to transition to top-tier hedge funds or other buy-side roles.

2. MM IB (Solomon/TD/Cantor):

   • Pros:
     • Broad skillset development in financial modeling, valuation, and transaction experience, which can open doors to a variety of roles (PE, HF, corporate strategy).
     • Stronger brand recognition compared to a Tier 2/3 boutique AM, which can help with future transitions.
     • IB experience is often viewed as a "stamp of approval" for hedge funds, especially if you're targeting strategies like merger arbitrage, event-driven, or distressed investing.
   • Cons:
     • Less direct exposure to public markets and investing compared to AM.
     • Long hours and potentially less focus on the type of investing you're interested in (e.g., L/S equity).
     • MM IBs may not have the same prestige or exit opportunities as BBs or EBs.

3. Endowment (>5B AUM):

   • Pros:
     • Exposure to a variety of asset classes (public equity, private equity, real estate, etc.), which can help you discover what you truly enjoy.
     • Work-life balance is typically better than IB or AM.
     • Opportunity to build a strong network with top-tier asset managers and funds.
   • Cons:
     • Limited direct investing experience, as endowments are more focused on manager selection and asset allocation.
     • Harder to transition to hedge funds or other active investing roles.
     • Compensation growth is generally slower compared to IB or AM.

Recommendation:

If your long-term goal is to be an investor with a focus on hedge funds and public equity, the Boutique LO AM seems like the most aligned option. It provides direct exposure to public markets and the type of investing you're interested in (L/S equity, alt data, etc.). However, if you're not 100% certain about your path and want to keep your options open, MM IB might be the safer choice due to its broader exit opportunities and skillset development.

Ultimately, your decision should also consider factors like culture, work-life balance, and your personal interest in the day-to-day work. If you're still unsure, you might lean towards the option that gives you the most flexibility to pivot later.

Sources: Fork in the road: Career path in Asset Management, Citi, Lazard, Jefferies, Fidelity, Morgan Stanley, Most academic style of investing that requires the most thought?, Breaking into long only Asset Management, Best Route to a fundamentally driven HF in Londob: IB vs AM?