Is there any reason to switch PE to HF now?

I don't believe the case for PE holds up now. Like I said in another thread, read Howard Marks' Sea Change memo. He basically explains that, the PE industry has seen immense profits because:

1) Decreasing interest rates increasing their spreads.

2) Decreasing interest rates making it convenient to dive head first into deals because it was cheap to borrow money.

3) Decreasing interest rates in turn appreciating the underlying assets making more and more money.

This has reversed, PE is highly leveraged now, will PE go back to its glory days? Absolutely, but remember that, PE still rode decreasing interest rates from the 70s-80s. The extreme success that PE has seen is a cumulative result of highly favorable decades worth of macro setting. If you think this'll all go away in the near future and PE will go back to its hayday, sure, PE is the best option for you to stay in. If not, It'd be better to choose something else. Just read Sea Change, he explains with more nuance and historicals.

The jobs are inherently different.  If you can look past a few years and take a holistic career view, what it takes to be a senior person at a PE fund and HF is completely different.  Yes if you are optimizing for ages 28-35, then sure PE is probably lower risk with more predictable range of outcomes.  A lot of people can do the analyst - VP job at a PE fund.  Not as many people can be principal - partners at a PE fund.  Also, PE carry DAW has underlying return assumptions imbedded in them and are back end weighted.  You can decide for yourself if you think those return assumptions from the last three decades of PE are replicable and more specifically, are replicable in your particular circumstances (your fund, your likelihood of reaching partner, etc).  

I did IB + mega fund PE and went to work at a top LO after attending HSW. My day to day is just 10x more enjoyable. Who knows what the future holds but I expect the money to end up being pretty similar over the course of my career. My advice is to go with the path you think you’ll be better at + enjoy more. Worrying about money at this tier is dumb, you’ll never be happy with that mindset

Research Analyst in AM - Equities

It seems like the PE world (purely from a wealth creation/job stability way) is far better than working in HF as all the top SMs are below HWM and the other option is to work at MM HF with a low chance of surviving/not being blown out in few years

if you are on a PE associate role with clear line of sight to VP/Principal for $500k+ cash comp and several million of carry, why would you ever leave for the CHANCE to make PM or have a big year where you make $2-3mm and then potentially get fired the year after. Yes the job is more interesting, but I assume most people join this industry for the $ which PE wins by a long shot 

I get complete different for IB/ER to HF, but talking specifically to 2+2s or 2+2s with H/S MBA 

Guarantees get you there on a cash compensation basis and HWMs are often a 10% incentive allocation until 2x max drawdown.  Many funds are down but not Tiger level down, and probably get back to HWM in 2-3 years which is also when you start being more connected to P&L. I’d suspect a lot of the 2+2 people still looking to go to HFs are aware of this and will go to those funds that aren’t down a ton.

I also think it’s a bit naive to think that someone who crushed it at a top 2+2 MF PE program going to a top SM would be foreclosed from going back to UMM PE after doing two years at a top HF and figuring it out that it wasn’t for them / that their returns weren’t going to clear HWM in two or so years. 

A  line of sight to VP in PE is like getting the SM offer, there aren’t guarantees that you are making it to the next step past VP (and it’s generally more likely than not you leave / are exited before you make it two steps, similar to the SM).

Most people have already highlighted this but think the best career advice is to avoid optimizing for "pay" and just figure out what you're good at x what you like doing. Someone else highlighted becoming a strong senior at a PE fund is dramatically different from being an associate/VP, the same way being a strong PM isn't always the same thing as being a strong analyst in HF.

Solving for highest pay/lowest risk or attempting to time a larger mkt cycle is probably the worst career move you can make; you'll find yourself joining PE right before a wave of massive markdowns and unsustainably high leverage costs. You'll then try to join a HF after 3-4 years of serious resurgence in returns just to see another huge wave of underperformance and drawdowns. This is obviously a huge hypothetical but you'd feel really ignorant if that's how it played out and you had attempted to game the point in the cycle for comp reasons. Tricky to know your context w/o your age & experience as well.

The 2+2 notion is what you're asking about so will try and answer that way: same thing. The top performers in HF world is a very wide variety of backgrounds with completely different interests and skillsets than those of their peers in PE. One isn't better than the other. Top HF PM's/analysts can make well in excess of the numbers you highlighted, the same way that the top partners at the top of the PE funnel can likely make in excess of that. I think the largest structural differences is that mega PE has been more recently optimized to clip management fees, so it's an AUM ball-game to some degree. You have to remember some of the larger SM's have economics with analysts, who range widely in their YoE, making well in excess of > $500k per year, maybe cash maybe equity. 

I think the $2-3mm PM idea is for top ~20% of PMs across MMs. Ideally the top 20% of the performing PMs across MMs are up marginally more than the total average of the fund, and you can get to that level of comp pretty succinctly - don't think it's really a game of "chance" for a "big year." Think big years look more like $4-5mm. 

You are right on job stability 100% and until we do see some sort of cyclical downturn in PE that extends beyond 5% markdowns in existing portfolio companies then you probably don't see much job loss or churn. 

I think the top performers in either industry can make a boatload of $. The risk/reward is higher in HF, the certainty of a 7 figure+ pay-day might be slightly more likely in PE with higher job stability. But just because you go 2+2 and are a PE associate with line of sight to make VP/Principal does not mean you are a shoe-in for Partner, the same way not every HF analyst is a shoe-in for PM. Either path has it's own nuances so it's impossible to optimize for which is better. 

Personality matters a ton too. People alluded to it but HF work is just such a better fit for who I am. I'm similarly 10x happier and more fulfilled doing this work. These careers are grueling and it will be difficult to find long-run success without at least liking what you do.

I'm currently at a LMM PE fund and have been thinking about switching to a public role. The problem is I'm in a very specialized industry where alot of the valuation is technical vs. straight financial and the general response from HFs and out of vertical PE shops is that I don't have enough finance experience. I have been thinking about going back to banking for the next 2-3 years and then from there trying to recruit to a HF or BS then a HF. Would you have advice for me?