Pre-2008 days, HFs were the fast-track to millions a year. Is that still the case?
Are hedge funds still paying out big bonuses?
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Yes. Have many friends within the space making $1M+ bonuses yearly
Like where
what strategy?
What other terms would "paying well" relate to?
exactly what I was thinking lol
Yes, but on a risk adjusted basis I wouldn’t call it an amazing path. HF is a very generic term, so let’s try to break it down into a few buckets:
1) “Good” MM shops (Millenium, citadel, etc): high starting pay for centralized roles (quant like), decent ceiling in those roles, slower progression than PM. For the PM path they will have high payouts but relatively low base. So the “path to millions” is just if you (or your pod) makes money. Eat what you kill type place.
2) large/“good” SM: more stable pay at the junior to mid levels. High starting pay and high ceiling. Less volatility (including to the extreme upside). Once you are senior, completely performance dependent (with high floors of $1mm+ for senior people). Much less eat what you kill, overall firm performance matters a lot but can survive on a few years of 0 perf (although obviously no Melvin type blowup)
3) top quant places (DE Shaw): more similar to SM although usually less upside in many of the roles than the investor seats in SM. High starting pay, if you are good $1-2mm is attainable, but keep in mind that these are top shops
4) Small firms/less reputable places: here the pay is a lot more variable. Keep in mind that there are top places that run low AUM/are under the radar, and these places will pay well, but almost all will do it in terms of bonus. Most pay in the Hf space falls into these firms (by count of firms and ease of getting a role) and they will tend to be A LOT less attractive.
The other thing I will say is that if the markets continue being choppy to down the forward looking for some funds is much worse. Specifically, the funds that could be concentrated and more similar to levered beta may struggle to attract AUM. The last 10 years have been amazing for these funds, and it’s hard to imagine that will continue
So what usually happens on these forums is that people talk a lot about the top funds (buckets 1-3) and don’t mention 1) that many people will get fired in MM and 2) most people won’t get into these seats.
Thanks for the info. I appreciate it. Just have one question though:)
For MM quants, you mentioned quants as the centralized roles, not having linkage to PNL, impling they are more like support roles for whole company rather than single PM. Does that apply to every quant in these MMs? I thought some of these MMs have pure quant PMs, (ex: Citadel GQS, Worldquant, Cubist, etc) and they would just also follow the PM path. Please correct me if I'm wrong.
Didn’t mean to say all quants are centralized, I was just trying to call out that there are centralized roles with more stability (quant is one although quant can also have pnl, tech is another, etc). Quant is another word that is thrown around way too much. Quants can be doing risk, portfolio construction, or things like alpha research (or in some places less investment focused work like data cleaning, etc) MMs definitely have pnl linked quants.
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