IB > PE > HF?

For context, I worked in IB for two years and have been in PE now at a MF for 8 months. I don't really love doing transactions. They are painful. Public market investing on the other hand seems relatively fun?

My big hesitation is that I'm not sure if I have the risk tolerance.. I'm on track to be promoted up to VP without an MBA and will be making 300k this year, which will steadily increase if I stay in PE. I've discussed a bit with friends and head hunters and places like Citadel and Millennium seem to offer very little in terms of job security and I don't have a clear idea of comp either... Have been told by headhunters that base at Millennium and Citadel is 150k and baseline bonus expectation is about 100%, which is very in line with PE, but apparently the upside is huge? In a good year could I really make $1mm+ cash?

Wondering if people can share some insights? Is moving over to Citadel/Millennium from a MF a good idea? Would my work life balance really improve and I could make millions? Or would I be throwing away a solid job for the prospect of likely unemployment and a long ass non-compete?

The transition in terms of comp, lifestyle, hours, and overall enjoyment is based almost solely on the PM you go to work for. The platform does not matter nearly as much.  

Hours will vary based on PM/Team, I would say 65-75 is normal and some teams are banking hours, so 90+, and others are more like 45-55, big variation.

Turnover, again based on PM, average analyst last 2-3 years before moving to another fund based on what ive seen. Based on a LinkedIn sample of n=200, over 50% of analysts that leave will go to another MMHF to either be an analyst or PM. Citadel has highest turnover generally, Point72 is the lowest generally, again PM matters more tho.

I know of an analyst that made over 2.5MM in his second year(I am completely sure he made this before people comment abt it). Upside can be crazy and I would say normally an analyst is 150k base expectation of probably 150 before being a P&L generator. 

Thanks. This is helpful. Some questions / follow up:

Work - Life Balance:

What are you actually doing for 90 hours per week if you're not working on a deal? Like what could possibly take so long unless you are sending pages to an investment committee or to a client? Do you still have to put together pretty heavily scrutinized powerpoint slides on the companies you cover?

Job Security:

Why is turn over so high? Is it just like the PM doesn't think you're good and then pushes analysts out on a two year basis? That seems stupid to me. Is there more job security once you become a PM? If a PM is pushed out then is the entire team pretty much cut?


I was told I would join as an analyst and would be responsible for coverage of about 20-30 names in my sector and work under a PM who runs a book of about $xxxmm. I would directly report to the PM who would report to essentially the sector PM who is responsible for about $xxbn in AUM. My question is sort of what has to happen for me to make $2.5mm? Who decides this? What sort of visibility is there? Will I be told by my PM if we return 10%+ on our $xxxmm then we can personally keep 20% of all profit above 10% and allocate based on seniority between the xxx analysts in my pod or something like that? Any idea how bonuses are actually calculated?

Thanks for the thoughts and apologies if any of my questions sound snarky. I'm just confused about how these funds operate. Seems bizarre having only ever worked at massive institutional investment banks / mega pe funds

I would edit your answer to remove some of those details, there are only so many people from MFs that are interviewing at that fund with a PM of that book size. Just remove number of analysts, name of fund, and book size numbers. If you would like to connect for direct questions about book size/analyst bonus, feel free to dm. 

Ill post another answer to those follow ups in a bit.

Is this sentiment of wanting to go to hf post mf pe common among your associate peers? Would you say more go to b school or to hf or lateral. Curious as I don’t have any insight into the mf world

I would say most common desire is to want to stay in PE and get promoted. Some people want to get an MBA, but most are very wishy washy on the idea. Some people are interested in HFs, but I'd say it's a minority. The exits I've seen out of PE though are generally to much better HFs than those exiting out of banking or undergrad, with exceptions of course. Personally, I think working for an activist fund would be awesome, but there are only like 15 of those jobs in all of New York. 

I would stay at your Cushy PE job. You only have significant downside joining a hedge fund these days (fund blows up through no fault of your own, one of your position blows up and you get canned, your PM doesn’t get along with you, your PM is stingy and doesn’t want to pay you even when you do well) 

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A high performer at a MF should almost never go to a multi manager like Citadel. It is a much lower EMV and higher stress role. Especially given it doesn’t sound like you’re deeply passionate about trading/stocks, more that you’re burnt out from the 2+2 and looking for improved lifestyle while maintaining good comp and your interest in investing. This feeling is common in the 2+2. 

HF hours may be better than private equity but there is higher stress and lower stability. It is also a much more individualistic job versus a team sport. If you’re really passionate about investing then it can be a great role. Many people who do HF after 2+2 regret it, as it is a secularly declining industry with comp compression and limited stability. At least in private equity, if you work hard, there is a clear path to consistent 7 figures in your early 30s. 

If you’re interested in activism, then go for  it. I’m confused why you don’t have more confidence that you’ll land one of those roles if you’re a high performer at a MF? Elliott has an army of analysts who can do activism trades, and they all have your background. Who lands those roles if it’s not you? 

There are really good single manager jobs out there but they are few and far in between. You should look for high AUM per investment pro and low turnover in the team. There are not that many MF associates that are on track for direct promotion. Hell, the only NY megafunds that I know with direct promotion are Apollo, KKR, and Silver Lake, and all of those funds have stellar HF recruiting with former associates at literally the best hedge funds out there. 

Thanks. What do you mean by EMV?

It's true activist HFs like Elliott hire out of PE, but as you go from IB > PE > HF the pyramid gets narrower. Does anyone have a list of HF focused head hunters? For PE, I just used HSP, CPI, Ratio, Amity, etc. but it seems like HFs use slightly different head hunters? Seems like Search1 maybe has a solid HF list? Any other ideas for how to find a good single manager besides LinkedIn?

I'm not really sure tbh, but at a standard L/S fund, I would just be doing fundamental analysis on equities in my sector, so knowing how to build a three statement model and do valuation work very similar to any corporate finance job (IB/PE) would be the primary skill set from what i've been told. Not sure if there's anything more quantitative than that... may depend on the fund...

Quant funds recruit STEM out of UG/PG/PhD vs L/S fundamental/activist funds who like bankers and pe types, just different strategies

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