PE vs HF

I'm in a peculiar position: I'm graduating from a non-target and I have no stellar jobs lined out, so I'm stuck between 2 long-term goals:

--> Long-term goal to get into PE

--> Long-term goal to get into HF

I think I'm more suited for PE because I like to work in teams, with management, prepare presentations, work closely with other professionals, understand businesses, marketing, etc. but to go with this route I need to get into a top MBA so it requires a lot of work. Still, that's where I think my character excels if we where to compare PE vs HF in terms of suitability.

On the other side, I could completely avoid the PE path and learn as much as possible about investing (which I already do)  and try to invest on my own. What I like about this route is that I will be learning a lot about investing in public markets and either I will become so good that I could manage my own portfolio or I'll be so good that I'll have a shot at a HF skipping MBAs/relevant work experience. I've been reading a lot of books on investing and I have this overconfidence that I could beat the market.

What's your advice/opinion? Many people say thst they would choose HF over PE but I'm analyzing my situation in terms of where I could see myself excelling (PE) vs. route without the need of an MBA or additional education/costs (HF).

I'm extremely poor. I just want to make money and live a good life.

Comments (9)

MMPM, what's your opinion? Comment below:

Read what you wrote: "but to go with this route (...) it requires a lot of work".

There are no shortcuts, son. If you want the money and the good life, particularly from where you come from, it 99% of the time requires a lot of work.

  • VP in PE - Growth

Yet another genius who thinks his portfolios beta is alpha.

Please please please for the love of god, take your money and put it in VOO. Put a little in each month and your money will compound and grow. If instead you try to outperform the market, you will fail. Read about the efficient markets theory and recognize when you try and "beat the market" you are competing against teams of phds trying to do the same. You cannot win. If you end up getting a better return in your portfolio, it likely won't be that you "beat the market" you just had a much riskier portfolio. In order to actually "beat the market" you need to have a less risky portfolio with higher expected returns. It isn't as simple as the S&P being down 4% and you being up 2%. That's not how this works. 

MMPM, what's your opinion? Comment below:

Don't forget about tax leakage everytime you sell a winner vs. the VOO compounding forever with no capital gains until you die. Makes a massive difference.

  • Intern in ER

competing against teams of phds

Competing against LTCM? Nice. I'll take that.

Most Helpful
  • Investment Analyst in AM - Equities

I don't think you have done nearly enough work to understand some of the basics of either industries. Take a step back and ask yourself what you enjoy doing and what your true passion is + what you think you excel. Money is not enough of a substitute for real passion. If it is really investing, I would go back and spend a lot more time learning about the basics of finance, career paths, what people do at each level, and why the HF industry in particular has become so much more institutionalized/consolidated - this will also show you why just self investing into a HF sounds absurd.

There is sort of a natural path of curiosity/passion that drives one to self education and understanding most of these basics - and at a certain point through that learning you should have already recognized why what you are saying is ridiculous. The fact that you haven't yet indicates to me you are not really that passionate and just think it sounds cool - which is totally ok by the way. Everyone starts somewhere and its ok to be in the early stages of learning about this stuff, but we can't help you because these paths you are suggesting are pretty detached from reality (your suggestion of self investing yourself into a HF/ easily outperforming the markets). 



  • Associate 3 in PE - Growth

Just to pick on one small part of the OP - working with management gets you going? I don't think you actually understand what working with management is like at a middle market private equity fund. It's not sexy and is often a giant headache.

In HF land, you also work across from company management and play the cat/mouse game to sift through the fluff and extract as much info as you can. Can be pretty fun at times tbh.

It's also, imo, critical to have a network in both public/private markets. While you'll have bigger teams in PE, that's also more direct reports/people up the chain trying to pull on you. It can be the same in a HF but generally in a pod model at least you'll have max 2 people above you asking for stuff.

The thing you should consider is what is your tolerance for BS - in PE, there's a lot. Dumbass partner requests, dumbass LP requests, fund reporting, portco mgmt doing stupid stuff, etc. There can be BS in a HF, very much dependent on your team, but generally there's less time for it. If you have a good PM, they're not going to ask for a bunch of absurd scenarios for your names - they'll want your targeted view and sound rationale behind it.

The real trade-off in public/private is comp volatility and job security. This has been litigated elsewhere so not going to do it again but all I'll say is what HF brings in true intellectual curiosity resulting in near-term quantifiable value, getting too far out over your skis can result in a goose egg bonus and finding another job. That doesn't really happen in PE, you may run out of runway in your fund but unlikely you'll be straight up fired.

  • Intern in ER

When people don't realize this is a troll post ...

  • 1
ironman5761234, what's your opinion? Comment below:

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