Passive/FoF strategies to direct securities research?
Just finished a summer internship at a mid-sized asset allocator and in the process for applying to internships for next summer. While I'm mostly set on equity research of some kind, I've also considered applying to alternative AMs (GCM Grosvenor in particular) and mostly passive investors (Blackrock, Van Eck, Vanguard, etc.) with less AUM in active strategies. But to be honest, I couldn't see myself doing a hands-off, LP-style job FT after I graduate. Could anyone comment on the transferability of the skills in AM to buy-side ER if I wanted to pivot after a couple years?
It's doable, but not the most natural route. Buy-side prefer IB and sell-side ER because they have the most transferable skills in financial modeling and telling stories with numbers and the businesses. You can learn financial statement analysis and modeling on your own, but you will still have to convince that you can apply those skills in a professional setting, which you don't in a LP / allocator / FoF role.
Thanks very much for the reply. I totally see that perspective, but this late in the timeline I'm also worried about the feasibility of finding seats in ER and I'm personally not pursuing banking. All that's to say is I'm worried the pivot is possibly less difficult than my current situation, so I'm wondering if I'm underestimating the challenge. I know that's a separate issue, but I'm curious as to your thoughts on that dilemma.
It's doable. If you can get into FoF, at least you have access to lots of PMs at every LP meeting. Network with them and float your well-thought out stock ideas with them discreetly.
I know people who have done FoF -> fundamental ER and they all say it's a very tough path due to lack of modeling/finance experience. The benefit is that you are learning how to manage a portfolio which analysts do not know how to do. It's sort of learning the skills needed to be a PM in the reverse order that most people do. I'm also applying to positions in FoF with the goal of going back to regular investing, understanding it would require a ton of self-study, networking, and possibly an MBA, but I'm okay with that tradeoff.
That makes a lot of sense, thanks. Of course the benefit is that recruiting for AM-type roles opens more doors, but it sounds like a real challenge. An MBA (from my understanding) is pretty much a silver bullet anyways, so doesn't seem like something I'd want to rely on for my ideal career
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