Is it easy to move from a credit/equity research job to hedge funds
Hello,
I am currently finishing up my MBA at a top program and have been receiving offers from the buy-side as well as research desks. I was wondering if I got to join a research desk rather than opting for a micro-cap HF (sub 300m), what are my chances in moving to a buy-side role in a few years. Mainly, I have a passion for credit and wanted to know if a credit research role can improve my odds at buy-side jobs.
Appreciate any input on this!
Hello there,
Based on the most helpful WSO content, transitioning from a credit/equity research role to a hedge fund is definitely possible, but it may come with its own set of challenges.
The transition would involve a steep learning curve, especially when moving from equities to a credit shop. As Howard Marks once said about credit, "the first rule is don’t lose money". Now, try to find an equity investment that doesn’t lose money in your bear scenario - it doesn’t exist. There's a big chasm to bridge to appropriately think about the risk return opportunities within equities and create an investment process that makes sense.
However, it's not uncommon for individuals to move from analyst roles in distressed PE or opportunistic credit groups to top L/S funds. While it may not be a common move, it's definitely feasible with the right experience and networking.
In terms of your passion for credit, a credit research role could indeed improve your odds at buy-side jobs. It would provide you with a solid foundation in understanding credit risk and investment opportunities, which are crucial skills for any buy-side role.
Remember, every journey is unique and there's no one-size-fits-all answer. It's all about leveraging your skills, networking effectively, and finding the right opportunities. Good luck!
Sources: Q&A: Equity Analyst & Trader (VP level) at $12+ bn Hedge Fund, Allianz Global Investors Graduate Programme vs IB?, Private Credit -> Public Credit Exits?, Credit HF --> L/S equity??
For sure. It more depends on what your coverage is - with HFs generally skewed more towards HY/distressed names - than whether you're doing it as a sell side research analyst or at a fund.
At the same time HF recruitment seems super idiosyncratic and largely driven by networking more than traditional job posting. For example I somehow managed to impress the right person at the right time, they started directing recruiters towards me, and all of a sudden I was hearing about jobs that never pop up on say LinkedIn. My theory is that it's because HF teams tend to be pretty lean and the process is more driven by the PMs than HR, but could be wrong.
No you're right. All the HF roles I am getting are through my HF network but tend to be at smaller names so the pay is not that good and there is a risk of lacking track record. So I was considering accepting an offer from a credit research desk then move to a credit trading HF.
Yes - sell side research to hedge fund pipeline is quite common. I did MBA -> sell side equity research -> single manager hedge fund. Tons of people I worked with on the sell side are now on buy side.
Can't imagine credit side would be much different.
Thank you so much for your help! Its just that someone told me that research desk is publishing oriented and not investment oriented therefore you do not get much traction. I do not know the extent of truth to that.
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