HF vs LO
Do you have to work for a HF if you don't want to work for an index hugging PM? Almost seems like the norm in the LO community.
Trending Content - Hedge Fund Forum
| +27 | James Fishback | 10 | 1h |
| +21 | Future of L/S | 5 | 3d |
| +17 | Latest blow up / wind down | 25 | 3d |
| +12 | Looking for Fund to Partner With - LMM Activist | 4 | 18h |
| +10 | SM L/S Compensation? | 3 | 20h |
| +9 | MMHF Central Execution Trajectory/Advice | 1 | 1d |
| +9 | How to prep for credit HF? | 4 | 1d |
| +9 | Moving from credit to equity? | 3 | 5d |
| +4 | Jensen Huang | 1 | 13h |
| +3 | Chefs at Pod Shops | 2 | 3d |
Career Resources
following
Not all LOs are index hugging. For example Dodge & Cox’s funds are very different from the index.
Also, at firms like Capital Group that use multiple managers on each fund, each individual PM does their own thing and doesn’t hug the index. Each PM will have their own investment style, preferred names, backgrounds, etc, and when you combine all these things it ends up looking pretty similar to the market.
It’s not like your job at LOs is to sit around and hug the index, your job is to generate alpha (albeit over a longer term). The combination of multiple people doing this while each controlling possibly billions of dollars is what causes these firms to end up pretty similar to the index, it’s not like they are actively trying to be close to it though.
I feel the index-hugging trend in LO can come down to 2:
1) It's just what happens on average, by definition. When everyone goes out there and tries to beat the market, it all averages out to index-hugging or at least it looks that way (on an unrelated tangent, same goes for factor investing strategies, trying to 'intelligently' capitalize on multiple factors which basically averages out to the index)
2) LO managers genuinely index-hug here and there. We're all working with constraints. All that window dressing shit and so on. Even Seth Klarman bought Alphabet and Meta
Basically, agree with the person above that no one goes out there and actively tries to index hugging or they'd be fired quickly
Atque asperiores dolor dignissimos est. Autem consequatur repudiandae fugit fugit. Ab et sapiente sed officia non non dicta. Aperiam officia labore dolore. In similique possimus voluptatem quisquam aliquam eum ipsa.
Eligendi sed vero dolorem non corporis. Omnis labore sint nulla corrupti et. Expedita odio harum rerum optio cupiditate. Quo est mollitia aperiam sequi quo explicabo. Pariatur laudantium et illum voluptatem iste et quisquam.
Inventore laudantium culpa et pariatur et minima ut. Eum reiciendis ratione amet illo. Nemo quia ullam culpa eum occaecati doloremque. Voluptates aut fugit illo ipsum voluptatibus ut. Omnis aperiam aspernatur quo omnis dicta dolores in.
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...