Hi,
I've seen some experienced fundamental analysts working at relatively high profile quant shops. What are the rationales for the quant shops to employ the fundamental analysts? What would be their primary responsibilities? Are they treated with "respect" (of course would be dependent on the culture)?
Thanks for the insights.
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If you are talking about DE Shaw - their fundamental side is completely siloed, and the caliber there is very high imo
Yeah, not them. The fundamental guys were a part of a dominantly quant team.
2S?
This is increasingly a trend among successful quant firms
There are very very few roles like this. I think this is a very risky transition. I would spend a lot of time asking them what you’ll be doing. If they are evasive, try to get them to describe the process without disclosing their IP. There IS a way to do this. Really understand what you will do year 1, year 2 and year 3 of the job.
the biggest issue with this role is you are likely to end up suffering from a monopsony on your talent; that is to say, the skills you develop might be highly specific to just this 1 firm.
Appreciate this.
May I ask what your responsibilities are in general and how they differ from what you'd expect from a fundamental shop (e.g., company/industry/macro/financial analysis, management interviews, building models)? I keep asking myself why a quant fund would need someone dedicated to the fundamental research/analysis and what it (the transition) could mean for my long term career trajectory.
There is information that you can’t gather through quant analysis (or rather, gather and effectively analyse and be confident in) that you can do fundamentally. Humans are better than machines at some things. That’s why they’re hiring there
You will not do most of what you do at a hedge fund because it doesn’t scale to be fast enough for a quant firm. It is sometimes interesting to learn to do a 15 min analysis in 1 min, which is why people some might like this. The work is similar to what you'd do in investment banking but probably much simpler from what I've heard.
This is kind of a problem even for pure quants in some quant funds, especially some of the smaller shops. The strategy and investment process may be very specific to that fund, and the work you do is not really transferrable anywhere else, so they can pay you poorly over time (and are insecure like you said).
I have a few industry friends that do this at various quant shops. When I ask what they do, they always respond that their job is to make the machine (algos) better. Everything they do is to improve the quant engine. I ask more questions, and they keep repeating this in different ways....sometimes I think that even they don't really understand what goes on there...
At a high level, yes it can be impossible to tell what the engine is doing due to the nature of its construction. Some firms have tuned their engine such that there is almost full automation from end-to-end (trade idea generation all the way through to execution/position management). So when your friend says he's improving the system, that's more or less true and the sort of vague response you'd expect people in this industry to give. But realistically, these people are mostly working on data integrity/sourcing and investigating new markets for their algos to generate signals in.
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Which quant firms have this?
Are you talking more about a place like citadel, sig, or Jane Street? They're different.
How do you think they are different and how do you know? What is your background and what do you know first hand / through friends?
I interviewed for a fundamental role at citadel and I've had friends at the other MLS. I also know someone high up at SIG through networking and a friend who used to do buy side ER there. Jane Street I've only heard rumors. We could talk offline if you want.
I'm in sell side er 2 years out of school. I'm not an expert just relaying what I understand to be true.
Bump - I have an interview for one of these fundamental roles at a quaint shop this week. Will relay back as to what the role is but would appreciate any context that anyone can offer
How did the interview go? Did you get to learn more about the role?
It was a weird role - not a traditional buyside role but a role where you do fast paced pricing of equity offerings. No deciding whether to buy or sell, just models / research + sell-side style work. Very weird tbh
I’m currently a fundamental analyst at a quant firm. Would be open to networking with others in the same boat, or help anyone with an interview coming up.
Can I DM you?
PM me
Can I PM you? Thanks
I interviewed for 3 of these positions at prop trading firms. The interviews had a selection of simple accounting, some basic quant probability, market making, and then questions on mergers/events, a stock pitch, and a bit about investment philosophy. Sounded kinda narrow, and each firm gave a fairly similar spiel on what they roughly wanted. I'd recommend knowing a recent merger or forthcoming merger and understanding the expected value of a trade there. Also knowing what drives mergers, why they may fall apart, risks, etc.
How do you feel like this role compares to a more traditional role? What was your perception of whether this is a good role?
was the poster. PM.
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