Big LOs
Can someone explain to me the appeal with Big Long Only funds (Fidelity, T Rowe)? Mutual fund outflows are only increasing and these big players have massive enterprises that need to get skimmed down. I understand the career is cushy, but I struggle with squaring that with the long term outlook
I get the Argument can be made about HFs as well, but at least the upside is a bit more material
I am just curious here for thoughts and perspectives so thanks in advance
For one it’s actual investing, not the speculation game that Citadel/P72 plays. Also if you end up at a fund with a history of outperformance, especially during the 2010s, you’ll learn a lot. Important to filter out the RCGs of this world with horrible performance and try being at the funds where the people leading it are genuinely smart and thoughtful investors that adapt to changing market environments.
So 6 folks are triggered cuz they think what they do at Citadel/P72 is actually INVESTING?
Positive features from prospective analyst's perspective:
Negative elements:
An Analyst seat at Wellington, T Rowe, Fidelity, Capital Group is still one of the best gigs on wall street and probably the single highest probability path to a $20mm net worth by the time you're 50 in the game.
Grew up with a parent at one of the big LO shops (Fidelity, Wellington, etc) so can offer some perspective on the pros -
Cons: you have to go through an expensive MBA
Yeah it puts you on a path to $5m+ / year, but you need to pay $150k upfront.
And you say you're good at investing?
Your reasoning could only be valid if :
1) everybody could enter/pay a $150k MBA program
2) all MBA students could integrate a top LO fund right after the program
3) all analysts/PMs integrating a top LO post-MBA would be guaranteed to make at some point $5m+/year
4) the money you spend today has the same value than the money you'll potentially earn in decades
Lots of discounting factors "MMPM" but yeah !
No other industry where you are literally paid to underperform.
I would say on a risk adjusted basis you will make more at an LO vs. HF and have a much happier life in general. Free time to see my kids, tons of autonomy without worrying about having to find another job and potentially move my family, etc.
My friends at HFs are jumping from seat to seat while my comp has increased steadily. My other friends at LOs are mostly all still in their seats 5+ years in.
Sure some of the HF guys have had longevity but 75%+ haven’t lasted more than 2-3 years in any one place, and it becomes harder to improve your situation over time the more you do it. I would be willing to bet that at this point any new analyst seat they get is paying guaranteed comp well below mine and their bonus will have to be great to push them above me. Seeing people who I know for a fact never considered going from SM to MM now taking roles at the latter signals to me that it’s their only option vs. they actually want to be in those strategies.
All in your risk tolerance. I love the lifestyle to pay aspect of this job and will have plenty of money saved by the time (if) things in this industry get to a point where I have to leave. I will not be worth $50M when I’m 40 but will have a few $M saved by then and when I detach myself from finance/WSO-think I realize that is wayyy more than I will ever need based on my lifestyle (though to be fair I’m not living in an expensive city).
This makes a lot of sense. Thanks for your input. Out of curiosity, what does senior analyst (7+years of buy side experience) look like at large LOs like Fidelity, Wellington? Does it continue to scale over time, like into your 40s and 50s? Strongly considering a move from PE over to LO
Can’t answer for sure bc I’m not at either of those shops, but would assume good analysts at those spots cap out around $1m max for top analysts at 10+ YOE (to be clear I’m saying YOE as an analyst so think late-30s through mid 40s age) and it stops progressing much beyond there. You’d have to make the step up to PM to exceed that is my guess. I could be wrong. Would be surprised to hear LO analysts anywhere are much into 7 figure territory. I honestly could be way off but that’s my sense based on my experience, idk.
I am in the ballpark of what you describe experience-wise (6th year as an analyst and 11 YOE total) and comp is hard to pin down precisely but should be in the $650-750k range this year depending on how fund does. I will have the opportunity to step up to PM in probably 5 or so years but I doubt my comp grows much beyond this point unless inflows pick up and my PMs feel generous. I am at a relatively well-known boutique with ~$1.5bn per IP if that helps.
The number of 7 figure LO analyst seats is quickly shrinking. Most funds are suffering from flow/fee pressure and are fighting this due to a strong market the last few years. There are a large number of sr analysts who make less than they once did and industry avg is likely closer to $500k than $1M. Good money for WLB but not what it once was and upside is disappearing at most firms.