Can buy-side macro quant strategist roles lead to actually managing money?
I've been exploring those macro quantitative strategist roles that exist at the larger macro funds, i.e. the guys supporting discretionary PMs by building quant tools/providing a quant perspective to inform macro trades, rather than being a source of alpha themselves through signal research. Want to eventually be in a risk-taking role with direct P&L impact & wondering if these roles can be a good way to get there.
From reading a number of threads on here, 2 opposing viewpoints stood out about quant roles at discretionary shops:
- macro at the junior level is all about quant these days, so in a good seat you'll start out purely providing this quant analysis & can eventually be given a risk budget in the long term once you've picked up enough of the intuition side/built enough of a rapport with the PMs
VS - working as a quant for a discretionary manager is not a good idea because you're only ever going to be seen as a technology department guy who's tasked with finding data to confirm a PM's point of view/upgrading excel to python etc & never given your own risk budget
So I have 2 questions from this:
1) are either of these views more accurate for quant strategist roles at macro funds?
2) if the brand name is strong enough, how much does this matter at the junior level...? Provided I pick up enough of the macro intuition, would it be that hard to leverage one of these roles into a risk taking seat somewhere else further down the line if it turns out to be more like the second scenario?
This is a great question and one that is heavily portfolio manager/firm dependent. If you are hired to join a particular PMs team and your comp is directly coming from your PM's payout, you will likely have a chance to move towards running some of your own strategies under your PM (starting with pitching trades and maybe evolving to a sub-book). If you can help your PM make money and the PM wants to teach you/let you understand some of their process you will be able to make the leap. A decent number of buyside PMs in macro do come from this background. In this seat you may have the title Quant Analyst or Analyst, depending on the nature of the strategy.
For example of how this might work - you might be hired by a rates vol PM as a quant analyst. She might ask you to help build a dashboard/screener to identify statistically dislocated structures based on historical analysis. In the meantime you attend idea meetings/get signed up for research subscriptions etc. You build the tool and pitch a trade that has both statistical and fundamental merits based on your experience. 9 times out of 10, she laughs at you because you missed something/didn't consider something obvious. But 1/10 times she lets you put it in the book and you get to help manage the trade. If you continue to find good opportunities and are able to transition to think about broader portfolio risk management (e.g. not putting on 10 different variations of the same trade and calling it diversification), she might give you more responsibility. For you to make the leap in this way you need to be 1) making a positive impression and adding individual value, and 2) your PM needs to be making money.
If quants are viewed as a separate team to the investment team it's really unlikely to make the leap. You are disconnected from the investment process and will never be seen as someone who will manage risk. You might work on identifying some signals for research and develop some systematic strategies but your trajectory moves away from being a discretionary PM towards managing larger and larger projects/juniors. Comp in these seats is still good and less variable on PM performance (e.g. look at Citadel quant offers!) but not the same structure as traditional discretionary PM seats. In a smaller fund you might still be able to leap to a Jr. PM seat if you're able to build the right connections, but it becomes a much lower delta proposition.
Follow up on brand name-
It won't get you a PM spot elsewhere because PM interviews are very different than quant interviews and don't have much to do with "macro intuition" at all. If you aren't doing a portfolio management adjacent role/sitting in a more "analyst" like seat you're not going to do very well in PM interviews. It will help a lot getting laterals for higher comp in the quant world.
This is great info, thanks a lot. Annoyingly does seem like most spots I've come across fit into the category of a centralised quant team. I guess the tricky thing can be knowing how to find the opportunities that are directly under a PM. Any advice on approaching this - would it be a case of tracking down PMs directly who look like they're doing interesting stuff?
Would you advise against taking one of those centralised quant macro roles for a year or so in order to get looks for the better type of analyst spots - probably an overly indirect route?
In my experience 80% of such roles fall under the 2nd category. So statistically speaking, u are better off forgetting about it, and looking directly at quant alpha roles.
Spent 3 years as bucket (1). After 12 months, was the equivalent of flushing my career down the toilet. Watch the systematic z-book go up while your PM gets progressively more toxic in your direction. "plz change x axis font labels to 90 degree angle on graphs" etc.
Bucket (2) - depending on your pm's personality and track record- can be a great opportunity.
What did you do after that opportunity? Also, did you help build the systematic z-book and were you compensated for it?
Lmao hell no. Systematic guys are usually under the tech department at discretionary funds and don't have a % deal.
Thanks, definitely good to know - similarly to the guy above I'd be keen as well to hear how moving away from that role went
https://www.wallstreetoasis.com/forum/hedge-fund/discretionary-vs-syste…
FYI I was the guy who wrote this comment that I'm guessing made you ask this question.
I managed to find a PM that I got along with and got hired onto his team directly, so I lucked out. If I didn't get that, I would have joined a HFT or quant fund as a SWE. Even that would have been better than working under a discretionary guy you don't get with.
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