London buy side

Based on the most helpful WSO content, here’s a breakdown of the trade-offs for each path you’re considering:

1. Stay in the Current PE Role

• Pros:
  • Potential for meaningful long-term upside through carry, especially if you stay long enough to reach senior levels (VP/Principal and beyond).
  • Opportunity to work on large, high-profile transactions, which can enhance your resume and network.
  • Stable platform with a clear career trajectory, albeit slower promotion timelines.
• Cons:
  • Slower cash compensation growth in the near term compared to other options.
  • Significant process-oriented work and internal hierarchy, which can feel bureaucratic.
  • The PE industry is becoming increasingly competitive, with oversaturation and lower IRRs in some cases.

2. Move to a Large Multi-Strategy Fund or Credit Hedge Fund

• Pros:
  • Exposure to both public and private investments, offering a broader skill set and more dynamic work.
  • Significantly higher cash compensation (potentially 2x your current PE pay), which can be appealing in the short term.
  • Opportunity to work on complex, high-stakes investments like activism, distressed situations, or capital solutions.
• Cons:
  • Limited long-term upside without meaningful carry, as these roles are often more cash-focused.
  • Concerns about job security due to the shift toward pod-based structures in the hedge fund industry.
  • Still involves a fair amount of process-oriented work, which may not differ drastically from your current role.

3. Long/Short Equity Investing

• Pros:
  • Arguably the most intellectually stimulating option, especially if you enjoy deep research and market analysis.
  • Potential to join a larger, more established single-manager (SM) platform, which can offer stability compared to pod structures.
  • Opportunity to develop a unique investment philosophy and skill set that could be transferable across industries.
• Cons:
  • Long-term career prospects are uncertain due to industry trends like the rise of pod platforms and AI-driven investing.
  • Compensation can be highly variable and dependent on fund performance.
  • Breaking into a top-tier SM platform can be challenging, and the learning curve may be steep if transitioning from PE.

Key Considerations:

• Risk Tolerance: If you value stability and long-term upside, staying in PE might be the safer bet. However, if you’re willing to take on more risk for higher short-term rewards, the multi-strategy fund or credit HF route could be appealing.
• Intellectual Curiosity: If you’re seeking a more stimulating and research-driven role, long/short equity investing might align better with your interests.
• Lifestyle and Work-Life Balance: Consider the intensity and hours required in each path. PE roles often involve long hours, but hedge funds and long/short equity roles can be equally demanding, especially during volatile markets.
• Industry Trends: Be mindful of structural shifts in each industry. For example, the PE industry is becoming more competitive, while hedge funds are seeing a rise in pod-based structures and AI-driven strategies.

Ultimately, the decision depends on your personal priorities—whether it’s compensation, intellectual stimulation, stability, or long-term career growth.

Sources: Citadel Global Equities (pay, culture, career path, lifestyle), Breakdown of Post-IB Exit Opportunities, Golub Capital type direct lending fund, Private Equity vs. Venture Capital in 2018