Economist at Macro HF to PM
Can an in-house economist/macro research role at a hedge fund to lead to a direct risk taking position? Since most PMs at macro funds come from a trading background and as an economist you are more focused on general macro analysis (like forecasting inflation prints) rather than portfolio management, I'm wondering if anyone has experience with making this jump.
I've seen it done twice. One econ undergrad/PhD oil econ. One astrophysics/Phd econ shadowbanking. Both had R matlab python coding exp. Will need to recognize econ is a "soft science" practiced in a vacuum to translate frameworks / models to work in real-world. To make the jump in-house to PM need to specialize (G4/G8/EM inflation, oil, etc) and make some ballsy calls that turn out right or generate leading indicators that translate to trades you can get on in size.
If you data dump info in PM meetings and the head of the fund asks you what the trade is and you say everything is fairly priced you'll never get a shot. But if the firm is prestigious and you interview well, other firms will hire you for strat poaching.
Thanks. I am actually coming from a stem major rather than an econ background so I have the coding/stats skills so perhaps that is helpful. In terms of making bold calls, would my main goal be to convince the discretionary PMs that I support to place specific trades in line with my projections? I feel this is very hard to do given the rest of their book at any given point in time but perhaps that's why this transition is rare?
Its all firm-dependent honestly and if you get hired the first year should be doing the job they need you to do and build political capital. imo you're too green atm to even think about making "calls" but that will come with time.
At pure macro funds I think pretty rare for reasons you have stated (gap between forecasting and trading). At EM focused funds have seen this bc the economists are more strategists that are forecasting and making trade recs in fx, local rates and sov credit.
That's interesting about EM rates. Are economists able to make more concrete trade recs in EM just because there's less info that the PM can pay attention to (and hence the economic forecasts weigh more)? My firm does focus more on G4 but we do have PMs doing EM so maybe I should reach out to them to see if I can get involved with their process?
My view was that discretionary PMs come from both trading and research but it seems like nowadays the vast majority is trading.
My comment refers more to EM "analyst" type roles that are open to trained economists rather than EM focused economists vs. DM focused, but let me expand:
1.) on the margin you are correct; i'd argue with credit/political risk too the PM may value the economist more in an EM setting and potentially one can argue especially when you get to frontier that you can have a forecasting edge
2.) that said there are plenty of "EM economist" roles at macro funds that do pretty much what you are doing now
3.) however at EM long only funds and EM FICC hedge funds you have analyst/economist/strategist etc roles where the PM's are looking for trade recs in fx/rates/credit (can see how this makes transition to risk taking easier); line is probably more blurred between HF/LO in the EM space than macro space so certainly see bouncing around between the two (may have to take a circular route if want to be an EM HF PM but i'll leave it to you whether EM LO PM is better than macro fund economist)
4.) my highly simplistic heuristic across FICC products is the relative opportunity for research vs. trading to become a PM correlates with the liquidity of the product...for hopefully obvious reasons this makes sense and in turn can also come to conclusions about DM rates vs. EM rates vs. EM sov credit etc.
Hope that makes sense/helps and of course there are always exceptions!
PS have no idea on your internal dynamics but tread carefully- if you are on a central research team as long as your boss is cool with it I don't see the harm...
Not for long discretionary macro will be dead very soon.
I know this has somewhat been the trend but wouldn't there always be room for one off opportunities that systematic approaches can't cover? Curious to hear your take.
Rerum consequuntur non sit nihil iure. Voluptatem sunt numquam ut.
Quia non voluptatem suscipit. Aut blanditiis odio qui asperiores totam provident qui perferendis. Et laboriosam assumenda eius labore. Autem qui porro dicta non maxime odit sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...