HSW MBA vs Direct HF
Hello,
I'd like some advice on a path forward. I'm currently in sell-side equity research at a BB, and performing well. My long-term goal, however, is to join a L/S hedge fund or long-only, work my way to PM, and eventually make my own fund later on. I am receiving a lot of interest from buy-side recruiters, and given the opportunities I'm being presented, I do think that I could move to a L/S hedge fund directly within a reasonable time frame if I focus on recruiting (long-only is tougher, less turnover).
I also have an admit to Wharton, and am waiting on Stanford/Harvard and others. I wonder if an MBA from one of HSW is worth pursuing, especially given that I want to create my own fund later on (could help with raising capital), or if going directly to a HF still seems like the better option? Other factors to consider is that I can envision myself working with international equities when I start my fund (potentially even emerging markets), so the school brand value could be helpful (my UG was non-Ivy); and, by the time I graduate, I'd be close to 30 years old, so I wonder if that would negatively impact my HF recruiting prospects. I also would prefer to expand my current sector focus, so an MBA may provide more options on that front than recruiting directly right now.
Thanks
Following
My view is that an mba is an expensive option to change your career entirely. You don’t want to do that - you want to move to a related field. So the $ cost and time cost of an mba is not worth it to you. Moreover, competition will be significant and if you don’t get a HF job right away, it could actually set back your career. Not many funds recruit from mba programs.
just one person’s opinion but grind away and get the seat from ER. The opp will probably be at a pod shop but there are worse things. You’re employed and earning instead of paying and can wait for the right opportunity.
note: this is the perspective of someone with no mba who joined the HF industry almost right out of college 15-20 years ago
.
An incredibly valuable perspective nevertheless - appreciate the response.
Your view is much more aligned with what I've heard from other people in the industry that I've spoken with about this question. I've come to accept that the MBA cannot be worth it on an ROI basis in a 5 or even 10 year time frame, potentially. Two years of lost earnings and a delay in career progression, especially given where I'm at (might've been a different discussion if I were earlier in my career), is quite a lot to sacrifice.
Beyond some of the more minor factors I mentioned, like broadening out my sector focus, I think my largest source of hesitation is that I won't ever have the opportunity to capture the brand name and network of a top MBA ever again. I can't imagine myself going back to school later in life. Since I do want to run my own shop one day, and potentially internationally, the opportunity cost for the top MBA might be worth it on a longer time horizon. In other words, I can stomach the lost earnings now if I think that it's worth it for that long-term goal. The potential career setback that you mentioned, however, would probably make the experience a detriment. Any parting thoughts on this view? Thanks again.
Keep in mind that the perspective HFPM brings is that of a success story (survivorship at play). For every HFPM, there might be 10 others who took the same path, flamed out of a pod shop within 2 years, and wished they had done an MBA to give them a leg up on another career. You're less likely to hear from them.
If you are able to get into a stable long only or family office seat comping you $300k+ with growth and low turnover, I would agree it's a no-brainer that the opportunity cost of an MBA is not worth it.
For a pod shop seat? Not as clear cut to me. If you are confident you can be a winner at that game, maybe. But again, many others have trod the same path believing they could be winners. Very few of them ended up like HFPM.
Some might say, "that's a loser mentality, you'll have no chance in hell of succeeding in this business if you think like that." Which may be true. But you only have one life; you don't get to average across all the outcomes where you would've been wildly successful (which is the implicit assumption in the expected value calc you're probably doing).
One other point: successful track record matters way more in terms of raising capital and running a fund than having an MBA.
haven’t gone and looked it up, but would guess that the vast majority of successful launches in the last 8-10-12 years were heavily skewed away from PMs with MBAs.
maybe not true of older funds (launched in the 70s-80s-90s) but guessing it is true for 2010 forward (and even plenty of older ones).
Not familiar with hedge fund world, why are pod funds considered inferior to other styles?
No investment style is "inferior"; there are pros and cons for every investment firm category. In general the multi-strategy pods are more short-term event-driven trading focused and their strategies have very tight risk controls. Some [analysts/PM] are happy under that style; others don't like that strategy b/c they like to be more "long term oriented" in their analysis. Second, your team has to consistently outperform (almost immediately), with tight risk parameters (again), or is pushed out (average analyst tenure tends to be fairly short). There is much less long-term talent development. Thus the work environment tends to be high pressure/intense w/ long hours. On the flipside, if you do very well under this strategy then the payouts are very high and can occur very quickly. Thus, working at a pod is high risk high reward.
If you already work in BB ER I don't really think you need an MBA. Calculate the opportunity cost including losing 2 years of income... will be a $400K-700K expense. Compound that $400-700K @ 8%-10% over the rest of your career to get the PV of your investment. I don' think you can make the numbers work if an MBA only slightly to modestly improves your chances of landing a buyside job. Worst yet, if you don't get one of the few MBA BS seats right away, you'll be back in ER (Where you were before) or have to go to IB. You can make the transition to L/S or LO without it if you impress clients with your analysis as part of your day job... keep networking and coming up with pitches. A MBA would even be a net negative in the eyes of some/many L/S PMs.
If you just want to go for 'prestige' of having a "brand name" on your resume... and don't care losing six figure dollars then go for it.
Send me a dm, would be happy to provide my input
Thanks, will do.
MBA is good as a reset button in case you can't get a better job otherwise, but if you don't NEED it...I know it's HSW but it's also 2 years of no income, and 2 years of all the BS that comes with going back to school like mandatory woke lectures and so forth. MBA isn't undergrad. If you want to party, just go to Vegas.
Nah, depending on your background MBA is arguably more egregious than undergrad because your grades don't matter and all you need to do is get a job. Can't do Vegas for 2 years straight.
It will never pass an ROI test anymore for this field. You go because you want the experience or actually value having a masters degree for personal satisfaction. Imo if you’re interested enough to apply, you should really consider it. You will make plenty of money regardless so go if you would like and don’t go if you decide you wouldn’t. Hard decision for sure.
People need to stop with this ROI bullshit for MBAs. it's VERY RARELY worth it monetarily, unless you're coming from some non-profit or other very low-paying job. I honestly don't understand why this isn't more well-known.
The question really is "how much do you value 2 more years of relevant HF experience versus 2 years of school." Some people really value 2 years of exploration and fun where you get something "prestigious" out of it -- typically you're not going to do this again in your life. Other people would prefer to work (presumably they like their job). The point is, your MBA won't really help you get exactly what you want career-wise, and it won't explicitly set you back other than opportunity cost. Need to evaluate things on a holistic level, because if you view it purely in the lens of career + financial result, it'll lose every single time.
I went to one of these bschools. It won't help with any of the things you mentioned. There is also no financial justification for it, especially since your alternative is to go directly into HF. Go to bschools because you want to further your education, expand your network, take a break, and/or just get a really great life experience.
Bump
Nisi ipsam est dolor. Dolores commodi eos ut rem. Sit ut ab eum at libero dolorum sit est. Ex commodi cum occaecati cum rem cum assumenda.
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...