Basically, I'm wondering if there's a rule of thumb for how much aum a long only manager has to have to be equally appealing from an employment perspective compared to a single manager long short fund with $x under management. ie, would you rather work at a $500mm l/s or a $4b lo? $1b l/s or $10b lo? etc. Purely from a perspective of career optimization -- I know you may have an intellectual / personal preference for one style or the other
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“Career optimization” is ambiguous. everyone’s utility curve is different.
Of course. but don't you think the general premise of the question is valid, acknowledging that peoples' preferences will vary? As someone who is not in the industry yet, I really have no feel for this at all, so even ballpark would be extremely helpful
Are you optimizing for learning? Compensation? Notoriety / recognition?
tell us what your variables are and we can answer more acutely.
it’s like asking if someone should be your type. depends on what your type is.
Also, you're optimizing seemingly assuming you'll stay in such fund for the rest of your career, which suggests you don't have a clue just how volatile and unpredictable this game really is.
Cut the 20 year old some slack. I'm sure he's just asking for a ballpark breakdown regarding management and performance fees at both shops and what multiple of AUM would be needed to equalize LO and L/S
Issue with this is that the larger long only firms (and small ones by virtue of smaller revenue streams) benchmark "junior pay" to other long only asset manager, which when you're younger is much lower than similar age HF/PE/IB comp (though maybe some exceptions to that like say Select Equity).
I know people at $200-500M L/S firms with few years of experience who have made 400-500k (because their funds return 15%+ net in a year) while I know some ppl at $10B long only equity funds that have been at firms longer than above and barely cracked $250k
any more color on what those $10B+ LO analysts expect to make over the next 3-5 yrs? My understanding is LO comp starts small but scales nicely as you hit more senior lvls
As with this entire industry, it totally depends / theres no hard and fast rules. Usually the situations I've seen where someone is making comparable total comp at a LO (ignoring stability of seat of LO vs. volatility of HFs) is when they are promoted to managing their own portfolio / own set of risk and that usually doesn't happen until you're like early to mid 30's at LOs. If you are just a standard "analyst" under a PM, it takes much longer vs. HF "generally" "can" pay very well in your mid to late 20's in good perf years.
Again, maybe firms like Baron, Select, Ruane, Capital etc operate a bit differently and put you towards 7 figure comp quicker (by your late 20's) than your average LO, but those are extreme exceptions to the norm. HF if you are decent and it's north of 1bn AUM + not overstaffed, you should be at least able to clear 400-500k in a decent-to-good year after a few years in the seat (call it 26-28 years old...also you will get exposed to downside of getting fired / fund shutting down in HFs so it's not all rainbow and sunshine).
I guess this a long way of saying, getting equal comp at a LO is more about longetivity / being in the seat for life type of game ("clipping steady coupon" or just straight luck that your LO PM retires and you inherit a stable LO fund as a PM) vs. assuming within 3-5-10 years your comp catches up to your friend working at a medium-to-large HF.
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