How common/hard is the jump from Rates S&T —> Macro HF
I understand S&T is “the exit” but I am interested in Macro HFs because of a more flexible mandate and ability to be more creative with investment theses.
For anyone who made the jump/new others who did it, how common are exits to macro HFs? Is it only the top decile of VP/MDs, or do people make the jump in more junior roles?
Also, I see many people here post about going for a masters to get to a macro HF? Is that really the dominant strategy as opposed to spending more years in S&T?
What names target sellside exp more often?
sorry, I just feel like the process is not covered on these forums like equities HFs
Ah, the classic leap from the trading floor to the high-stakes world of Macro Hedge Funds! It's like swinging from vine to vine in the jungle, looking for the juiciest fruit. Here's the scoop based on the most helpful WSO content:
Commonality of the Jump: It's not as rare as a banana with a zipper, but it's not exactly common either. The transition from Rates S&T to Macro HF is definitely possible, but it's not a walk in the park. It's more common for those who have shown exceptional skill and have a solid understanding of macroeconomic factors.
Who Makes the Jump: It's not just the silverbacks (VP/MDs) who can make the move. Junior roles can also transition, although it might be a bit tougher. The key is to have a strong track record and the right network.
Education vs. Experience: Going bananas for a master's degree? It can help, especially if it's from a top-notch school and you're looking to bolster your macroeconomic framework. However, experience in S&T, especially with a focus on macro products, can be just as valuable. It's not always about more years in S&T, but the quality of those years and what you've learned.
Targeting Firms: Some Macro HFs might be more inclined to pluck talent from the sell-side. It's not a one-size-fits-all, though. Each fund has its own flavor when it comes to hiring. It's about finding the right fit – like matching your tie to your suspenders.
And don't worry about feeling lost in the jungle. The process might not be covered as much as equities HFs, but there's still plenty of wisdom to be found in the forums. Keep swinging, and you might just land that dream spot in a Macro HF.
Sources: Macro: Rates and FX, Global Macro Hedge Fund is Paradise, 1st Year Macro HF Analyst: My Macro Framework, Macro vs Rates RV, HF exits from macro vol desks?
bump?
bump, interested
This is a great question and one prospective S&T new grads should understand. From S&T, you can jump at a junior or senior level. I'll break the paths down below:
Junior Level (Analyst/Associate/AVP): Generally speaking as a junior you'd need to have at least a couple years of experience to learn your products and market dynamics before leaving to join a pod/PM as an analyst (HFs don't want to spend energy teaching you before you become useful). The analyst role involves some combination of research (reading/talking to strategists, building models/screening tools), trade execution, and operational support (being your PM's BA, making sure marks are correct, risk is booked, coordinating with other teams when systems aren't working). The path from there is proving to your PM/the fund that you're driving P&L, growing your own book of strategies, and then eventually making the step to risktaking yourself.
As a cautionary tale, I would say 20% of analysts end up making this leap as it does require a lot of things to go right: 1) Your PM/team needs to make money, 2) Your PM needs to support you and believe you are adding value (when often their incentive is to keep you working underneath them) and 3) You actually add topline value that's not easily replaceable. I would personally not leave the sell-side at this level unless you're joining an existing very successful PM team with a long buyside track record (>=3-5 years). Most PMs are stopped out and you want to make sure you leave for a role where you are learning from someone who has demonstrated profitability.
Mid-Level (VP/Director): Typically at this point you have been a trader running a book for several years, not necessarily as head of the desk but with ownership over a particular product/segment. You have a track record of producing P&L and have some core strategies you can explain as to how you're making that P&L beyond spread-capture/inventory management. Now you can look at sub-PM/Jr. PM opportunities and potentially even full PM opps, especially if your asset class is "hot". Your job here is to convince yourself and BD that you have strategies that you can port over to the buyside. This is the core of hiring/churn at the major pod firms in macro/derivs/RV. People entering at this level have experience and risk appetite (usually late 20s-late 30s) without very high opportunity cost so are willing to take the risk of the buyside seat. You probably won't get any budget to hire a team at this level, so will operate either as an independent risk taker or as a sub-PM in a bigger unit.
Senior Level (MD/Partner): These are the marquee hires for the large pod shops that get reported in Bloomberg/Business Insider. At this point you have a track record as head of the desk, 9 figure budgets on the sellside and high opportunity cost. If you're leaving at this level you're leaving to build your own desk and have a considerable budget to hire and a commitment from the hiring firm for at least 2 years. These hires typically take a while and are very case-by-case because the opportunity cost for the potential PM is high and the hiring firm is investing a substantial amount of capital.
From the MFE track - you open up additional roles that typical S&T folks don't have the skillset to do. Most macro pods are fairly quantitative in signal generation and modeling, so instead of hiring only "traditional" analysts they hire a team of quants. MFEs lend themselves well to that seat as you learn both products and CS/data work in school. There are definitely more junior roles of this type than traditional analyst seats these days. However I do think there's a tradeoff - it's very hard for firms to give risk capital to those with no trading experience, so turning a quant analyst seat to a PM role is quite difficult. So while there are more junior roles at HFs from this track (and certainly higher compensation early career), most of the PM/high value seats are made up of former traders.
Not OP but thank you so much for this. What are your opinions on trading the linear rates products (bonds/swaps) vs derivs in terms of buy-side opportunities? Do you have any suggestions on how to develop as a junior on the sell-side if the end goal is to be a PM?
More vol/derivs seats but they tend to be smaller. Largest risk takers are delta one rates guys. How to develop? Work hard, think, ask questions, read, and listen. Being plugged in you start to understand how folks think and trade. Learn your products in and out and the flows that dislocate/create alpha in them. And learn to articulate your theses and turn them into trades.
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