HF without carry is equivalent to startup without stock options?

Based on the most helpful WSO content, here's what you need to know:

1. Work Intensity and Hours:

   • Working at a hedge fund (HF), especially a small/mid-sized (SM) one, is intense. The moment you sit down at your desk, your brain is on 100% until the market closes. This intensity can lead to a "stock trading mindset" that persists even outside of work hours.
   • Weekly hours at a smallish equity long/short (l/s) fund can range from 60-70 hours, with the potential to work 100+ hours if highly motivated. However, this is not sustainable in the long run.

2. Comparison to Startups:

   • The comparison to startups without stock options is apt in terms of the high intensity and long hours. In HFs, the work is meaningful and interesting, but it requires a deep passion for the field to endure the demanding environment.
   • Unlike startups where equity or stock options are a significant part of the compensation package, HFs may not always offer similar long-term incentives like carry (a share of the profits).

3. Quality of Life:

   • The quality of life in HFs can be challenging due to the constant urgency and high responsibility. This can lead to burnout, as seen in individuals who have left the industry due to the stress and intensity.
   • In contrast, roles in investment banking (IB) or private equity (PE) might offer more downtime, with 20-30% of the day spent on less intense activities like grabbing coffee or doing mundane tasks.

4. Compensation and Career Track:

   • Pay at a long-only fund is generally lower than at a hedge fund, but it comes with more stability and less risk of getting zeroed out in bad years.
   • Career progression and compensation can vary widely depending on the firm and individual performance. While top performers at HFs can earn significantly more, the risk and stress levels are also higher.

In summary, working at a hedge fund, especially a small/mid-sized one, can be likened to working at a startup without stock options in terms of the high intensity and long hours. However, the compensation structure and career stability can differ significantly.

Sources: The reality of HFs, The reality of HFs, Why did you choose HF over PE?, LO to MM HF?, WFH Should be the Default in IB