Next 5-10 years, MM or SM
I'm thinking about the future of the industry over the next decade or so. Where do you guys think is the best place to be in? MM or SM? Fundamental L/S or quant? What do you guys think?
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As an investor/asset allocator - MM by far
As an employee - SM by far
I hope you realize the irony of this statement… there can only be one answer with a 10 yr+ time horizon
This seems contradicting, assuming OP is taking the view of a young person entering the field or just starting out.
Sure, the next 5 years you may experience more stability in the SM space, but let's assume that the size of the total pie (HF space) is stable next 10 years (which might be a very heroic assumption). If MM is going to seeing more favourable trends (i.e. growing or stable share of the pie) per your original comment, whereas as SM is set to be decreasing, I would think for a young person's career, 10 years in the "wrong" industry is not how you want to start out a career.
On top of that I would layer the argument of SM's tendency to ride along on factors / net long exposure, and I personally (with a large degree of uncertainty) don't think this will fare well next 5-10 years.
Do feel free to correct me if I am missing something crucial.
There is no surefire way to guarantee success at a MM, there' s a lot of luck involved and it's an uncomfortable job for even the top performers. Starting pay is likely below SM starting pay/more volatile, and there's no guarantee you progress.
There's still a lot of "easy" (all relative) paychecks to be collected as a jr. analyst at a well capitalized/high AUM SM and you can get 2 - 3 years of fairly straightforward progression as long as you do your job, even if the SM category is losing share overall. And it remains easier to transition into an MM after 3 - 5 years given the high turnover and constant need for fresh bodies, after a SM career, than vice versa, esp. given seats will get fewer and fewer.
Definitely fundemental L/S. Excited for what the future holds for funds like D1, Holocene, Anomaly etc. These firms especially have been knocking out the park since inception.
But isn't quant actually gaining share? Or is it all hype??
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