Post-MBA Analyst Comp in Europe. What is Market?
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I will give you some tough love and say you would be completely crazy to move for this new role.
EUR 200m, 300m is absolutely nothing for a LO as you know. On 50bps average fee they make EUR 1 - 1.5m revenue p.a. Seriously??!! Is this part of a bigger group or a standalone fund? If the latter, do not in any circumstances consider this - you will not be getting paid much at all, and it is very difficult in general to raise money (ie. you will only get paid if they scale to several bns that is much easier said than done and takes many years).
As an aside, EUR 110k + 50-100% bonus does not seem out of line. However with a EUR 1 - 1.5m revenue per year I highly doubt these guys are going to be in a position to pay you that.
US LOs in general pay quite a bit better than european ones. The US in general is a wealthier country and salary levels across pretty much every industry are higher than in Europe (just check out London vs. NYC IBD salaries - I say this as a european btw). Even in London, the US LOs are known to pay in general substantially better than the european ones.
You say: "as I believe the upside is significantly higher in their strategy." I highly doubt this honestly. Stay in a good US LO and in 5-10 years you can very realistically be making $1m+ p.a., and if things go very well for you after that it can become much better than that. I think it is extremely unlikely you will achieve this working for a tiny european LO.
Appreciate the insight, and of course the tough love.
Couple of clarifications: 1) the fund is long-only but it is hedge fund vs. a mutual fund. The fee structure is 1.5% management fee, 20.0% performance fee, 2) the fund is one of the oldest in its unique strategy (can't say much more as it would narrow it down too far), and 3) the fund has returned over 20% per year since the early 1990s. 2020 was the one down year they've had since 2008, and even with a -20%+ drawdown, the CAGR since inception, 3 years, 5 years, 10 years has easily beaten their benchmarks.
Definitely understand there is risk here and I am 99% sure I want to join the fund, just don't want to get less than I should going in.
Bump. Curious as well.
Apologies if I come out as if I am hijacking your thread, but would you be able to talk a bit about your transition from non-HSW M7 MBA to $100B+ LO AM? What was your background? Were there a lot of positions available in the industry in your on-campus recruitment? Is this a fairly common post-MBA job? Were most of your classmates who also entered the industry upon graduation coming from the industry pre-MBA or were they career switchers? Thank you very much in advance as my dream goal is LO AM and want to get an M7 MBA as well!
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how are they doing 20% a yr since 1990 and only at 200m EUR? that should raise some red flags. whats the fundraising history for them? big outflow events?
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That seems extremely questionable - large yearly distributions while generating what appears to be very good returns? Do they lack confidence in their strategy/why would you not want to compound these returns?
And old cofounders retiring - does that impact the strategy/process?
Are there size constraints to the strategies (thus preventing really good economics)? Will there be similarly large distributions going forward?
A lot of this really doesn't add up to me. Seems like a very odd situation all around and I'd tread careful.
Really bad move unless you are 100% sure that you want to live in that country for lifestyle reasons and I'm saying this as someone who lives in Switzerland and spends time in all 3 of those countries (I love Spain and plan to retire there but man are the wages low haha). Here are my thoughts:
1) Allocators don't waste time doing due dilly on small funds as they can't be larger than 10% of a fund's AUM. What this means is that, if I have a EUR 100m ticket to write, I don't even bother looking at funds below EUR 1 bn, just not worth my time. As a small fund you are 100% dependent on family office/HNW money and that is hard to come by. This is the reason why you see so many high performing funds stuck at 100-200m AUM and the boring LO index-huggers with billions/trillions of AUM keep sucking in cash.
2) You talk about upside, but the only upside is getting a partnership stake. Do you really think these guys are going to give you a stake at some point? That has to be on the table, otherwise there is no upside. My experience is that a lot of these smaller shops are stingy when it comes to handing out equity stakes so unless you have a clear path to getting a stake in the business I would keep my expectations re upside in check.
3) As it seems like you are set on taking this job, I would ask about how diversified AUM is, and if there is any path to P&L linkage or a partnership stake if you perform.
4) As an FYI, a good salary in Madrid (my favorite city in Spain) is around EUR 2000/month after tax. So if you make EUR 40-50k a year in Spain that is considered good money, just goes to show you how low salaries are in the capital city (the NYC of Spain). Salaries in Paris and Frankfurt/Munich not much better to be frank. The best paying seats are in London and even there comp is below the US. I would say 100k base and 50-100% seems right for France and maybe Germany but too high for Spain in my opinion.
Best of luck!
Odit a et cum optio. Soluta vero earum neque est sint. Corporis omnis rerum maiores recusandae nostrum amet.
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