Hi I see a bunch of discussion regarding SM/LO / tiger etc
However for someone who works at a hedge fund in a macro/fx/commodities seat like at cit/bam etc what is the comp looking like?
Say junior level is 250-400 (0-2 yoe buy side) but then is 150 base and potential pnl? US focused
Thanks
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Based on the most helpful WSO content, compensation for junior-level roles (0-2 years of buy-side experience) at macro-focused hedge funds like Citadel or BAM typically falls within the range of $250K to $400K. Here's a breakdown:
This structure aligns with the general trend in macro/fx/commodities seats, where a substantial portion of pay is variable and tied to performance metrics.
Sources: https://www.wallstreetoasis.com/forum/trading/compensation-at-oil-majors-and-physical-houses-for-traffic-desk-and-traders?customgpt=1, HF exits from macro vol desks?, HF Comp - junior guys, What fx/rates/fixed income desk is best for macro/rates hedge funds?
Macro is notoriously hard to break into as a junior. If you do, it takes a while until you can become properly useful, which is why juniors might be paid on the lower side for a bit. But as you become an expert you have a lot of upside, because in the end everyone wants someone who not only has a decent strategy but can scale it. The biggest macro PMs can run north of 200m vols - now imagine you get 15-20% of that.
Overall I would say progression is the following:
You start as some sort of analyst with a quant background (STEM major) supporting the PM by building different monitors and tools. Alternatively, you do a few years in S&T and come in to do some small risk taking, but you still do all the same things a quant analyst does. More people now actually start in London (Citadel GFI is a big example) and earn around £220k (base + bonus) for the first few years.
You then become a small risk taker (in some places it's called an APM, in some it's just an analyst) where you bring in some PnL but still have a discretionary bonus. At this stage of your career you make a bit more than when you joined but not too much—if you perform well you can target 500k all-in. Good mental math is you will likely get 5% of your PnL contribution (direct and indirect). So if you brought 10m to the table with risk taking and the tools you built, your comp will roughly be £150k base + £500k bonus.
The next step is sub-PM, where your comp will finally be percentage-based. Getting 10% of what you make is a good estimate. The amount of vol you can run will be directly dependent on the vol your PM is running. For example, if you work for an average PM who runs like 30 vols, you can probably get 10 vols. If you have a 1.5 Sharpe year, you'll take home 1.5m (minus whatever your cost split is). I do know pretty junior guys getting up to 50 vols to run (more likely to happen if you have some sort of semi-systematic strategy with good results), but for that you need your PM to run 100 vols. At this stage, the median person who made it here (selection bias) can make 150k + 1-2m.
The next step is becoming an independent PM, or senior PM as they are called in some places. This can take a while to happen - you need to be consistently making 30+ bucks a year with 10+ YOE to get a shot at that at a place like Citadel. PMs there likely run at least 40-50m vols, with top ones running 100+. You can do your math to figure out comp.
Thank you. So you would say the beginning is tools and “analytics” stuff and then with time you get to be closer to the market?
Also additional question. It seems to me (perhaps I’m wrong) the comp is lower and progress lower than prop shop/market makers, is this right? Also it seems less collaborative and more cutthroat, why would someone join a HF rather than a quant shop? First year IMC/Sig should be like 350-400 while at HF is 250 and doesnt seem like it scales as fast.
Yeah, on your first comment it sounds about right: at first you do whatever the PM wants you to do, and over time you start to understand the trading style a bit more, come up with ideas, put some tiny risk on to get a feel for risk taking, and transition into a proper risk taker.
On your second comment: these prop shops do pay their grads more in the beginning, but keep in mind that my original message talked about median outcomes, not means. There is a bigger right tail in HFs, and the main reason for that is capacity. In the beginning you are barely useful, so you get paid just enough to take the job. But as you get experience, because macro strats have very high capacity, you will bring in more PnL in absolute terms and get rewarded proportionally for it, as opposed to optimizing for Sharpe in prop shops.
In the end, although the choice between quant and macro HF is a choice in theory (both need STEM majors), the reality is the industry will choose you based on your ambitions and risk tolerance. A risk-adjusted career is for sure better in prop shops as there is way less turnover and way more stable comp, but it will likely top out in the very low 7 figures even at top places. If you go into macro, you are agreeing to longer hours (as a lot of it is discretionary, so you need to be there at market open/close), but in return you are getting a higher ceiling. Starting from sub-PM you will likely be making more than a quant, and as an average PM in a very good shop you will be making 5m+ in a decent year.
Similarly, collaboration is great for learning, but that also means there is less ownership, which is the whole point of a pod system. You just need to choose what you value more.
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