What is a good way to contextualize returns in a MM pod?
Would +5% vs S&P be considered a good return for a pod? What is the typical range that you expect from a median performing pod and how often do you see 10%+ vs S&P returns?
Does every MM fund using S&P as benchmark for comp and performance and not use sector specific index?
| +24 | Disciplined but sad / feeling burnt out | 8 | 10h |
| +11 | How is deferred comp invested in hedge funds that use a pod structure? | 2 | 4d |
| +7 | Are Big4 MMHF grad programs still worth it? | 3 | 5h |
| +6 | Point 72 Referrals | 3 | 5d |
| +6 | Albar capital? | 0 | 17h |
| +5 | Back office keeping messing things up | 2 | 1d |
| +3 | Linonia Partnership | 3 | 1d |
| +3 | Lone Pine Co-CIO Leaves for Atreides | 2 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Pods are market neutral so they would look at absolute returns not returns vs S&P
Truism have heard is 1-3% return on gross market value (longs and shorts) is good, 5% is very strong, HSD with any consistently is god mode
Think there is some Pareto distribution to pod returns so the majority are not great and get managed out while most of the PnL comes from relatively few pods (some of this might be structural like TMT and Heathcare having more dispersion) and a lot of it is down to better risk management and process (or if you want to be more cynical, luck)
This is accurate in my experience as well.
As has been noted, almost never vs S&P or any benchmark. Market and factor neutral (at most places) so absolute return is what matters (but again, they will force factor/market neutral so that isn’t easy).
Dumb question but what is a MM Pod?
https://mergersandinquisitions.com/multi-manager-vs-single-manager-fund…
A reasonable downside case is -100%.
Upside? Dream big.
Returns at market neutral funds are often thought of in the context of the strategy's vol. Returning your vol is generally considered good, and 2x+ vol as exceptional.
Some time ago, I once had a certain factor-neutral strategy sector head suggest thinking about my base case return as 30 vol and then subtracting that amount out from what it would cost for me to join relative to my existing expected payout and deferred comp. I guess they were trying to either test my naivety or how badly I craved a PM title...no thank you.
Would you mind explaining this in more detail?
Guessing they assumed you would make $30M in PnL, hypothetically would cost the firm $5M to buy you out, so your actual return is $25M?
Why is that a naive approach?
Ex itaque est totam est nisi consequuntur laborum. Veritatis non officiis omnis sunt. Labore recusandae praesentium harum unde aut nobis. Non molestiae consequatur ullam perferendis ea earum.
Veniam omnis provident voluptatem rerum suscipit. Est totam soluta aliquid accusamus repellat voluptatem veritatis. Pariatur doloremque quaerat autem porro quasi consequatur odit. Voluptates natus sunt qui.
Et earum veritatis repellat repellat. Atque consectetur eos debitis reiciendis. Quaerat vitae sapiente quis fuga. Et cum voluptatum dolore natus. Error exercitationem ad amet et officiis repellat nostrum. Beatae corrupti temporibus qui repellendus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...