I’m choosing between 2 offers at a $10B LO AM and $4B SM HF - both are sector analyst positions. I have listed some pros/cons I can think of for the two firms and would love some advice on which one would be better in terms of career development, exit opportunities, and WLB. TIA!
$10B+ LO AM
pros:
- job stability, clear career trajectory
- assume better WLB
- reputable name though not top AM
cons:
- more bureaucracy, heard one PM could be tough to work with though interview went ok
- lower pay
$4B+ SM HF
pros:
- working with a more intimate team, better culture
- higher pay
cons:
- higher risk around job stability and unclear career trajectory
- higher daily stress due to L/S strategy
- discreet firm, not even discussed on WSO before
Thank you for your comments. I realized I did not give much details so I will try to add some. The HF founders were from prestigious IB firms and have great track record. I will have my own coverage so it won't be an associate analyst position.
I can't comment on watermarks and it will be my first buy-side job so I won't know how I would do relative to that.
For the LO firm, position will also have my own coverage. career trajectory would be senior analyst - junior PM - PM but I agree that it would probably take years and with great performance.
I think I ultimately want to end up in a LO AM because of the better WLB and lower stress level, but I am having second thoughts on if I should join a small LO now over HF for that career
From my perspective, it really depends on the quality of the SM HF? How stable is their capital base? Has there been a lot of turnover at the firm? What are the employees’ backgrounds and have they performed well? How concentrated is the book and what does that mean for your lifestyle?
Where's the SM HF high water mark and how far are you from it?You'd have to provide us more detail on the responsibilities you'll have at each. Do you have your own senior coverage at either, both, neither? This can be a huge difference in pay ultimately vs being an associate analyst type.Did you ask them what your pay will be in 2-3 years if you do well?
And “clear cut trajectory” at LO means what exactly? Progression tends to be slow at some/many LOs and upward mobility can be limited due to low seat turnover.
From my perspective, $4bn hedge fund is large, while a $10bn LO is tiny (assuming LO only taking mgmt fee and HF has mgmt and performance fees).
$4bn is well established and should mean years of strong performance along with the PM having strong connections to LPs to raise that kind of money. even if it's not been discussed on WSO, insiders in the industry will surely have heard the name or know of a few analysts there.
Would your view change if the LO has $30-40B AUM? I have seen variable numbers online and not sure which one is more reliable. Thank you!
For sure ask them what AUM is. Should be publicly available. the trajectory and size of AUM is really important
A $30-40bn LO is probably mid-sized FWIW - are they under a HF structure or mutual fund structure? If latter you should be able to get more info / even data on inflows/outflows.
I would not choose an offer based on "size of firm" and "AUM" solely. It's a combination of what kind of role you want, the quality of the firms assets (inflows vs. outflows), strategy alignment, and comp trajectory. My original comment was just meant to bring attention to HF assets =/= LO assets in sizing.
Seems like you coming in relatively in a senior role, have a dialogue with the PMs on how your role will look 3-5 years down the line, presuming strong performance. Sometimes PMs can be cagey around juniors for whatever reason (i guess not overpromising) but if you're coming in with coverage there should be mutual trust/understanding.
Thank you for your comments. I realized I did not give much details so I will try to add some. The HF founders were from prestigious IB firms and have great track record. I will have my own coverage so it won’t be an associate analyst position.
I can’t comment on watermarks and it will be my first buy-side job so I won’t know how I would do relative to that.
For the LO firm, position will also have my own coverage. career trajectory would be senior analyst - junior PM - PM but I agree that it would probably take years and with great performance.
I think I ultimately want to end up in a LO AM because of the better WLB and lower stress level, but I am having second thoughts on if I should join a small LO now over HF for that career goal.
LO. You can always move to long-biased HFs later, and if you perform well, the LO path is beautiful (PMs get paid couple of $Ms with much less risk).
100% HF, I’d echo an earlier comment that pointed out $4bn is a solid # for a SM HF while $10bn is tiny for a LO.
Would your view change if the LO has $30-40B AUM? I have seen variable numbers online and not sure which one is more reliable. Thank you!
If you have these two offers you should be asking these firms some of the questions that you're saying you don't have answers to. You have multiple offers, and you can diligence the firm if you frame the conversation and ask questions the right way. I've done this for $500B+ LO firms, $1B HFs, >$10B HFs, etc. and people always respected the fact that I was digging in.
Is the LO a traditional mutual fund where you can look up their fund online and see performance and fees? You can literally add up the AUM of the funds listed on their website to get to the firm AUM, and apply fee structure to see revenue. How many IPs? If it's $10B collecting 30-40 bps, there's not a lot of $$ to go around. You need to be laser focused on fund performance for a mutual fund at this scale. Looking at L1 / L3 year returns for each fund vs. benchmark. Ask the fund about net inflows / outflows. Ask them about comp trajectory for a good performer. Ask the HF about AUM, performance, LP base, trajectory. Find former employees and ask them Qs - get a feel for the culture, style of the PMs, turnover, etc.
Go into this decision with as much info as possible.
You haven't provided enough information for me to give my opinion. On face value, there are very, very few LO mutual funds at ~$10B-$40B AUM that would be more attractive than a $4B+ SM with good performance / culture.
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