Pod shop or top tier LO
I’m a senior buyside analyst with ~8 years of experience. Leaving a boutique and have two offers.
1: Top tier LO. Great team and strong performance. PM track. Very stable and super competitive comp.
2: Hedge fund pod shop. Top tier multi manager.
At this stage in my career, my sense is that AVERAGE comp is about the same ~$600k. Obviously more upside potential at the pod, but also probably more career risk.
Curious for thoughts.
There isn’t much else to add to what you said. There are two main differences: 1) type of work and 2) risk vs reward
On 2 it’s simple, much more upside at HF with a fair bit more risk (depending on which fund). Are you comfortable with that?
On 1, the work is different. LO is, well, long only. At the HF you will have more freedom (well in some cases requirements) to run different strategies (L/S, etc) but also have very different risk controls (drawdown limits, but also exposure limits, etc). At HF you will probably have a faster track (or immediate it sounds like) to manage PnL, while at the LO it’ll take a bit of time. Faster pace at HF, bit more methodical at LO.
So as I said, mostly what you already know.
Im going to try to bring a different perspective not based on comp, but work itself.
You probably already know this working on the buyside, but there is a stark contrast not only in terms of work hours, but type of work that imo makes these jobs not always interchangeable, depends on how you enjoy investing.
LO is obviously a great seat, but you will never feel like a true “alpha” generator and is very bureaucratic. Your ideas will be far more “surface level”, with simple investment thesis spanning mult year periods and your work will focus alot more on owning great assets across cycles to hopefully outperform spx by a few points.
Pod hf is a stark opposite. Youll be thinking about factors, hedging out factors, and generating alpha at all costs. The job will be much more in depth with each company, you will need to understand minutae deemed “meaningless” by your LO counterparts. It’s more competitive and as a result you are always on the chopping block and could lose your aum at any point. Of course the thing is that you will see your work put directly to use and you may see alpha generation as a result of your analysis. It’s also a different feeling knowing that running in mkt neutral framework that your returns are almost pure alpha post factors, which is something you may or may not care about but could consider.
mutual fund people at management meetings ask about why the company is unique or why the company has a moat or whatever. While pod investors ask the most random details to try to get a 1% edge, which might feel useless, but cannot discount the fact that those pod investors only ask that because they already know what the LO people know from reading docs, they just need to dive deeper.
This post is asinine
”would you rather be Jeff bezos or an Amazon warehouse worker?”
”idk bro Jeff bezos is rich and has control of Amazon but he is not in the weeds of the warehouse while as a warehouse worker you get really into the forklift operations and there’s the thrill of getting canned if you go to the bathroom too many times. So I’ll say warehouse worker all day”
this forum is so dumb
You don't really live life to the fullest if you aren't on the edge of getting canned every day IMO.
Now being serious... If you can be on the "PM track" at a top tier LO why wouldn't you take that? That would take your comp >$1MM+ ..
hahahahahah that's a good one.
But then isn't pod shop pay higher than LO? It's just finance theory - you bear higher risk by being compensated by a higher return. If pod shops were purely just risky with no sufficient return (Amazon worker) then no one would do it. Of course, except for our buddy here who loves his job
Not only are a lot of your assumptions just factually incorrect, but you sound like a fucking loser
This was one of the dumbest thing ive read on this website. get these fucking college interns out of the HF forum.
So much hate for this comment lol.
Having been on both sides, I’ll say this depiction is quite accurate. Long only (some not all) cares about longer term, and to be truly longer term, management quality, business model, industry dynamics, moat, all those fundamental things matter, hence reflected in the Qs. Short term trading pods care about second derivatives for the next month, two month, or a quarter, hence reflected in their questions. I guess they are clever but may not be “wise”.
It is a personal choice, do you get pleasure for short term trading and that thrill in markets or do you enjoy research and patient enough to truly focus on the long term. No right or wrong answers. The worst is not focusing on the end goals, I.e. trying to be a fundamental medium/long term investor in a platform, or trying to be a trader in a loner term large AUM LO fund where trading can be costly and not aligned with what they tell their clients they do.
at the end of the day returns are king, not complexity and intellect and prestige. Majority of pods don't generate alpha
You don't know what you're talking about. Nice try, though.
Blah blah blah, written by an intern (prob in back office), great
Pod shop bro, live a little
I'd take the LO job almost every time if it really is 1) top tier and 2) PM track. Your average comp would be about equal (probably more) with way less stress. Also I assume you have no experience in the pod style of trading, so you wouldn't know if you're any good. Truth is most pod guys would jump at a quality LO seat, let alone a top tier one with a PM track.
Caveat by saying you didn't offer details. Might be a different consideration if the MM offered you a starter PM seat or a decent sized carve.
Could you provide some examples of true top tier LO? Do you think Neuberger would fall under that description?
Capital Group, Wellington, Dodge & Cox, T Rowe, Fidelity
LO AM imo but depends on your personal life.
Well the biggest question is what does your personal life (Married/Kids) look like and your associated risk tolerance. Ill say something controversial but MM HFs are very unstable for the sole reason that you are being paid to outperform and most don’t outperform. LOs have Analysts and PMs sitting around for years and years without any real outperformance to show for it. There is just so much more leeway afforded to LOs and it is more relatable to a F500 company in that your advancement is more dependent on your ability to play politics and internally position rather than have good investment ideas.
i do think on a risk-adjusted basis you are better off at this LO. You can always go from LO to MM but not the other way around. However if you have a lot of confidence in your investment abilities you could make 3-10x+ your LO pay as a MM PM so the upside is there.
Why can you go from LO to MM but not the other way around? I thought MM trained you to look even deeper and to be more precise in modeling than LO.
Usually, LO isn't clamoring to fill seats as turnover is relatively low, so your candidates from an MM background are competing with lateral LO candidates or SM candidates, who have an advantage in style similarity. Comparatively, MMs are a lot less picky.
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