MM guarantees?
What are mid level analysts getting as guarantees these days? Whats the dispersion between guarantees given out to analysts? Assuming coming from MM/SM hybrid model, trading own sleeve with own discretion for last 3 years and low single digit percent returns market neutral on >1bn equities book each year (pretty average outcome). Know it’s not the same as being at an MM construct itself and I haven’t had as strict risk limits which will work against me so I’m not as plug and play as a well trained MM analyst. But curious what people are hearing out there. Contemplating the move.
this is MM BD bait
OP trying to induce people to do "the math " and conclude pods are giving 2m -4m guarantees to random late 20s
"average outcome" gives it away - targeting all the what is my EV in different funds typ3s posts we've been flooded with
No I just don’t want to go in bidding blind but understand context is important and wanted to avoid the “they’re not giving any guarantee to people with no track record” assertion.
"Trading own sleeve with own discretion" would suggest you do have a track record.
Unless of course the sleeve isn't really a sleeve, and you call sending your PM a trading recommendation "discretion".
Which one is it?
Not to spark discussion but I’ve heard a lot higher than that for that age range fwiw (for someone that’s made real $ in mkt neutral and managed real GMV - yes there are some in that age range in L/S).
What’s considered real $? $100m pnl years?
Was actually just thinking about this, there is a low sample size of this profile in my network, but can confirm there is high dispersion. As low as 1-2 "guarantees" that don't really have to be paid out, up to 7 (with more like MSD returns on a similar book size to you).
IMO the large MMs don't really know how to price this - but it is also a hard decision. Do they take the gamble on someone younger and hungry to grow, or pay something silly for someone more proven with a longer track and demonstrated ability to thrive in a pod setup? Increasingly, my view has been the negative selection on experienced PM's moving is high, the only reason to move from a good seat is when you see a bad environment coming and would prefer to lock in the guarantee over actually producing, and the platforms are exposed to the other side of that trade. With the nonstop LP mandate to expand, the other option is reaching into younger talent, where of course the problem is it is much harder to evaluate who is actually good vs. lucky, and is more like pricing a VC investment vs. pricing fixed income - and the outcome is dispersion in pricing.
What do you mean guarantees that are not paid out?
OP here. I think he means the fund gives a “guarantee” conditional on a few other factors like whether you make money the first year. so it’s not a really a guarantee by definition and you can end up losing it. Compare that with $Xm upfront or end of year
Im talking to a $1bn SM, I have 2 YoE at a pod.
Am I eligible to ask for a guarantee?
Like 100% of my base ?
Are you saying that your discretionary sleeve is a billion? There aren't many pod seats with that high of discretionary capital allocation to a single analyst. If your risk constructs are not that tight, I'd think you are running $50mm VaR (guessing) -- I don't think many (if any) pod PMs are giving that much capital at risk to an analyst they have never worked with
Certaintly not saying that $1bn analysts don't exist in MM world, moreso just that many of these analysts are not new hires
I am interviewing with a HF that manages $1bn. 3IPs
Definitely not controversial for analyst sleeve to be that size. Seems like a good seat but if not getting comped like it then makes sense to jump - good luck. I didn't know that hybrids run sleeves tighter than 5% sd - I had the wrong idea in my head
Are guarantees usually paid out of the PMs pocket or does the platform subsidize?
I thought it was pass through at the platform level but others feel free to correct me if I’m wrong.
Usually platform subsidizes, but often not a 100% and in all cases if requires sign-off from management.
What would the PM's book size be if the analyst's sleeve is 1bn ?
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