Q&A Macro RV Analyst/Trader

Did one of these a couple years ago. Wanted to update as I’m a couple years older and wiser, but still grateful to WSO.

For the young monkeys out there, study the comment history of Bondarb, Matinghoul, and Rumplestilskin diligently. You don’t get knowledge from outside the industry often.

Brief career history:

  • 1-2 years at small directional macro fund as a generalist across asset classes (equities, credit, rates, commodities, fx)
  • 1-2 years at a larger rates RV fund

Gonna be a bit coy about specifics, but we trade what you’d expect a rates RV fund to trade (bonds, swaps, futures, etc.) across basically all developed markets.

 

Gonna keep this one a bit vague, but we trade a set of products that is not well understood by the rest of the market and we don’t stray very far away from that core competency.

Generally, understanding the flows in your product/market, who is incentivized or forced to take action given certain conditions, is the best path to success IMO.

 

Do you think you've developed macro "intuition" or a good feel for the niche markets you trade? And based on your response to the edge question, would you say outside reading the comments of the WSO posters you pointed out earlier and the popular macro books, poker is a good game to "prepare" oneself?

 

currently in a similar role to your first one - 1 year in, generalist covering a few economies across EM and DM.. what advice would you give to transition to a more trading-like role within the same fund or outside it? I am enjoying what I doing at the moment but would want to take risk at some point

 

Very few RV funds hire out of undergrad, and for good reason (I wouldn't even necessarily recommend it). You'll basically be useless until you have several years of product experience and these places don't have time to teach anyone. You're better off going into S&T rates or FX first.

By BB I'm assuming you're referring to a bulge bracket trader at a dealer? It's a completely different job. They're a market maker and make prices for people like me to trade off of. They can warehouse risk, but their job isn't to come up with original trade ideas.

Regarding quants, they can’t even trade the same markets as we do because most of what we do is OTC.

 

I'm leaving a LO and starting grad school next month. I think I want to do something similar to you (I know grad school is not the most efficient path to this outcome). Any advice of things to do on the side during school to learn/get more experience in your space?

 

My first fund would attempt to take theoretically offsetting bets across asset classes based on historical correlations, but obviously those correlations can change. They would routinely run large open explicitly directional risk in every asset class (e.g. long equities, short rates, long commodities, etc.).

As for my current fund, the model and strategy is entirely different so it’s almost not even comparable. We genuinely take very little directional risk - the net DV01 we run is ~ 1% of our gross.

 

Oh I actually thought of you when I read that reply you posted earlier about understanding the the flows in the product/market lol. Just want to say I enjoyed reading your substack a lot. Are you planning on getting back from the hiatus?

 

How much smaller is the buyside presence in rates vol RV versus linear? I imagine vol is much harder due to liquidity difference and size of market. Any additional color on this side of the RV world would be great as well. 

 

It’s smaller, but I can’t really speculate on relative sizes as I’ve never worked on the sell-side and don’t have a good sense for this. We do occasionally use option overlays on our positions, but vol is usually too expensive for our purposes (probably indicative of the fact that there isn’t a large supply people who actively trade rates vol).

 

How much are you using your fundamental macro knowledge vs more technical trading knowledge in this new role vs your old one?

 
Most Helpful

It depends on what you mean by 'fundamentals'. I find that people often don't have a rigorous understanding of what they actually mean when they talk about fundamentals and it's just a catch-all for lazy hacks who do 'big-picture' thinking. All good buyside PMs will have a thorough understanding of the relevant fundamentals of their market - you have to if you're paying bid/offer away and can't see client flow. If you don't you won't survive.

My prior shop was the type of place that prided themself on taking 'long-term views' and doing deep fundamental research, but I now recognize it was (mostly) bullshit. My current place does far 'deeper' research, but it doesn't look anything like a few guys sitting around pontificating in a room. Instead, it looks like paying critical attention to the very few things that actually matter, that really move the needle in any particular market, and taking specific, nuanced views on what might happen with these trends over a given time horizon.

In this very important aspect, my current job is completely different from my previous job. This is not to say that it's never possible to take 'big-picture' views, sometimes you have to (or should, if the risk/reward is compelling). But a well-informed 'big-picture' view should be earned by years of experience and knowing all the details and nuances of a market like that back of your hand. There are only a handful of people on the planet who are capable of doing this well.

 

Worked on a swaps and vol desk at a bank and I constantly heard “ these RV guys are so stupid, they just think because something is couple of deviations from the norm it’s a good bet, and then try to pick us off” lol I wanna be you tho lol

 

Et eius repellendus at voluptatem. Dolorem et quam tempore natus. Debitis maxime perspiciatis aliquam quo enim autem vero. Illo amet facere quisquam eos omnis minima maiores quo. Ducimus ad iure voluptate maxime consequatur vel.

Quia delectus repellendus consectetur voluptatem. Accusamus autem qui autem perspiciatis quaerat. Enim eius id tempora mollitia tempora voluptate beatae numquam.

Placeat doloribus eum dolorum. Nihil dignissimos nihil saepe alias saepe dignissimos. Et dolor beatae quia nemo saepe.

Nemo praesentium et quod odio suscipit. Et dolores et error ut placeat odio. Nisi facere molestiae omnis voluptas rerum deleniti. Impedit vitae sapiente excepturi. In voluptates eaque repellendus ut quia eum.

 

Id reiciendis libero autem qui sit reprehenderit nam. Repudiandae non dolorem non dicta doloremque porro. Et qui voluptatem est eaque ut voluptas.

Praesentium corrupti aut quis saepe optio error. Natus doloribus facere dolor qui. Velit nobis autem tempora. Illo perferendis enim atque dolores quia esse.

Ea doloremque modi dolores eius qui vel quia. Dolores maiores incidunt commodi consequatur. Non possimus quaerat quae vel facilis. Est sed et pariatur. Est assumenda quisquam sit molestiae est ut. Sunt molestiae nemo aut sunt laudantium rerum velit.

Inventore aut odit dolor animi assumenda officiis vel. Deleniti eos doloribus vel vero veritatis. Nulla quis distinctio harum assumenda commodi qui fugit. Vel architecto architecto nulla enim nihil. Et fugit molestias ut ea explicabo doloremque.

Career Advancement Opportunities

February 2024 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • Magnetar Capital 96.8%
  • Citadel Investment Group 95.8%
  • AQR Capital Management 94.7%

Overall Employee Satisfaction

February 2024 Hedge Fund

  • Magnetar Capital 98.9%
  • D.E. Shaw 97.8%
  • Blackstone Group 96.8%
  • Two Sigma Investments 95.7%
  • Citadel Investment Group 94.6%

Professional Growth Opportunities

February 2024 Hedge Fund

  • AQR Capital Management 99.0%
  • Point72 97.9%
  • D.E. Shaw 96.9%
  • Citadel Investment Group 95.8%
  • Magnetar Capital 94.8%

Total Avg Compensation

February 2024 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (23) $474
  • Director/MD (12) $423
  • NA (6) $322
  • 3rd+ Year Associate (24) $287
  • Manager (4) $282
  • Engineer/Quant (70) $274
  • 2nd Year Associate (30) $251
  • 1st Year Associate (73) $190
  • Analysts (222) $178
  • Intern/Summer Associate (22) $131
  • Junior Trader (5) $102
  • Intern/Summer Analyst (247) $85
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”