Quant hedge fund career progression
I've been working in a major quant hedge fund as a researcher for almost three years now and I thought it would be a nice idea to lay out my thoughts about the quant space, and maybe give a bit of a contrast to the overwhelmingly positive image quant shops get. Also, any advice on career choices appreciated.
Let's first take a look at the business model. The firm I work for has a multi-fund offering and each fund is somewhere along the life cycle I'm describing below.
It usually starts out with a good strategy (And a fair amount of luck, as with trend following which worked splendidly in 08). As time goes by and track record is built, AUM follows suit and the capacity of the strategy is soon pushed to its limit. Sure enough, returns start dwindling down and the high-water mark starts to be so far out of sight that you no longer care about it. This is when management fees kick in, with an increasing amount of time spent to cater for the clients expectations in an effort to raise more assets. You are no longer selling alpha, you're selling an exposure to a precise mandate. The army of PhDs that you've hired is reduced to a number to show clients how many physicists and mathematicians you have. Bad performing alternative alphas are kept if they make for a good marketing story that will differentiate yourself from your competitors.
The position of a quant researcher in such a firm is considered to be front office, and you are given responsibilities. One of my projects 6 months in oversaw a reshuffling of a portfolio that involved a turnover of a few yards over a week of trading. Work life balance is nice, I show up at work at 9am, sometimes take a lunch break and leave no later than 7pm. When a model breaks though, it's not uncommon to spend a sleepless night debugging and trying to beat the close of whichever market is still trading.
I believe those previous points extend to many quant HFs, although what may be different is the culture and the quality of management. Though this job definitely has more of a tech culture, it can still be ruthless. Front office jobs are cut on the slightest flicker of PnL, usually conveniently before the bonus. You can't trust anyone in management and they will not hesitate to lie to your face. They most definitely will try to fuck you over your comp as I've had it happen to me. Non-competes are just silly long. Potential for progression is small, people are given bullshit titles instead of a raise to do the same job (we now have several co-heads of whatever department, which makes absolutely no sense).
As I write this post I am myself doubting whether to stay in the business. The PM route is a long one, and as I grow more experienced and my comp increases, so is the likelihood that I will be the next one to get canned. The backstabbing culture doesn't really help either to trust an older colleague to share his advice or experience.