Life at a small Hedge Fund
I have an interview with a small hedge fund (4 people in total and around 200 million USD AuM, their return was >20% last year), they told me that they're open to hiring if I perform well.
I'm wondering how life at a small hedge fund compares to other firms. My only experience in Finance so far has been an internship at a MM Boutique and a T2 Bank within their M&A Team.
As with all things in finance: it depends.
Working at a smaller firm can either be an incredibly rewarding, team-orientated experience, or a very lonely one - it all comes down to how collaborative the firm as a whole is, what sort of culture / approach is adopted by those at the top, and - crucially - how well you get on with your colleagues.
The final point mainly concerns interests: if everyone in the office is football mad and goes to the pub together every evening to watch the FA Cup / Champions League, and you're into that scene, you'll feel a part of the gang; if, on the other hand, they're more introverted and tend not to socialise, you won't.
This is something that only really you can determine based on your experience with them. The upside is that often the smaller a firm, the more apparent a firm's culture is.
Entirely dependent on the personality of the PM. Single manager shops are just going to be unilaterally catered to the managers personality. You really have to feel out what that is, because if the guy is an asshole, and the fund is that small, then your workday will just suck. Nobody will speak because you all sit within earshot of the boss and the entire vibe will be shit. So actively ask the other analysts what culture is like, and if the fund has been around for a little while search linkedin for former employees to reach out to for even more honest answers.
I second this. The principals will drive the entire culture of a small fund. I'd gauge their personalities, their history and reputations, and the employee turnover. A shitty principal can make it difficult to be employable afterwards, so don't sign a contract with overly restrictive covenants (ex.: a small no-name fund shouldn't have a non-compete clause, and if it does, it should be a max of 3 months).
Good points above. This probably goes without saying but keep in mind the risk of what can happen if your fund has a stretch of poor performance. A relatively small change in AUM can be very impactful for a small fund and their ability to retain you. Does this fund have any capital locked up for a while? This is thinking farther out but depending on what city you're in your ability to move to a bigger fund could be a bit challenged if there's a surplus of people in the market and you're coming from a no-name fund. Just something to keep in mind.
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