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lol like most people here can afford to be picky.
Saying this from experience as I know someone in that position. $50m for equities, or even a bit lower might be okay, provided one is about to begin career in the industry or is a few years in. Also, there must be significant responsibility and a steep learning curve allowing for exit opportunities. I think then it makes sense to take the risk of limited upside at first (assuming low returns so low performance fee and stable AUM).
You can only hang around with a no growth fund for a few years but after that you lose faith. Added responsibilities not just at work but personal as well (marriage, kids....) make it difficult. If your manager really cares about your growth then things might be different; just think making analysts stick around by assuring AUM growth and then pay rise is common. Capital raising is a bitch.
Is base getting wiped out so common at all? I can understand if there is tail event. Anyways I'd imagine smaller funds would die to PRESERVE capital and then perform. They have more incentive to perform. Larger funds tend to be in a comfy position with fat 2% fee. I've noted some funds so huge they end up spending way too much time in just making sure they are not making a loss.
Might be worth thinking about small AUM funds but a part of a mid or a larger firm. Say a $30m fund with 1 PM, 1 analyst may be a trader (could be shared function with other PM's) but overall AUM at firm is $2bn. Such smaller funds benefit quite a bit due to brand and street recognition - i.e. prime brokers will still take you seriously because from your firm overall they generate millions in commission and other internal support with capital raising and so on.
SB'ed. Well said - seems logical.
LTCM had a pretty large AUM, they blew up quickly. It's going to depend on prudent risk management more than anything else.
Agree with @"guyfromct", risk management is important. However, I would argue that the growth projections of the fund and its top management would be much more important factors. How long has the firm been around? If its been 10 years and the fund is still small, its probably more indicative of management's ability to fund raise. However, if it's a newer, small fund with top dogs, not only will you get great experience wearing many hats, but you'll be a part of the core group as the fund grows.
It's always cool to have the prestige factor, but its also cool to work somewhere that you're getting a ton of great experience and the company happens to be growing exponentially.
Beyond just fundraising ability sometimes it's scalability. I knew one fund with strong IRR, multiple funds over the years, but an overall small AUM sub-500MM. They had a focused niche and did well, they had no interest in going beyond that.
100mm
1 billion. already been at a 65 million AUM place- too small for my taste
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