solo PM at MM platform
I notice there are sole PMs at MM platforms (millennium etc). They have their own books, but don't have any analysts. Do they don't have a need for analysts? How is that scalable/possible?
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I don't have any context/experience in the Equities world so I cannot comment on how analysts are employed within team structures.
In the Macro (and Macro adjacent) world, PMs use analysts for a variety of functions: execution, market covering assistance, idea generation, fundamental research, and basically any task they don't feel like handling and can offload to someone else.
For the most part, the lack of an analyst does not meaningfully hinder ability to scale a strategy and the impact on performance comes down to PM effectiveness vs. Analyst value-add. The one thing an analyst adds is simply more spare time for PM by taking on some tasks and some stress reduction in the form of someone to help oversee the book when the PM is otherwise occupied / traveling / busy for whatever reason.
many former macro bank traders (interest rate swaps, govt bonds, FX, mortgage backed securities) move over to the MM hedge funds when they are successful and have a good prop trading strategy.
These bank traders were essentially one-man-shop portfolio manager / traders...and while they might have used the banks research and technology....they typically do all their trading, security selection and portfolio management themselves.
What does a supporting analyst do for a govt bond trader? Not much...the trading and decision making is fast paced....from thought to execution in an instant.
These PMs are not usually making long term portfolios...they are actively trading in the markets intraday based on news flow and price action that happens in real time...and so an analyst just doesn't help much (and if they did, then the "analyst" would usually want to be their own trader/PM anyway).
I mean L/S equity MM platform, not macro.
Non-quant and low frequency I guess?
Or perhaps they just started and are in the process of building up their team?
I've seen a few guys do this successfully.
It comes at the expense of very detailed modeling, and idea sourcing tends to be more thematic or top-down. If you think about it, a lot of the work can be outsourced to the sell-side.
It definitely gets challenging during conference season and quarterly earnings, but as said, it can be done.
Buddy's brother does this at a multi-strat (not one of the big guys). Rationale was that he didn't spend the money on an analysts. Would assume it caps the size of his book but potentially could be worth it from a P&L perspective if he's content.
It's the other way around. A small book doesnt allow enough economics to pay an analyst, much less a full team. That's why this standalone Pm thing is more prevalent at the smaller MMs where the books are smaller and the P&L cuts lower.
I've actually seen P&L cuts at smaller platforms comparable or larger than the bigger ones. Also, some of the smaller platforms are more lenient in letting PMs source external funding in separated managed accounts.
Happens a lot more than you would think. Example, almost all the PMs at Arya (AB's HF platform) don't have analysts.
Wait, seriously? - that is shocking. How can AB Arya expect to compete with that lack of resources?
more analysts does NOT = better returns
How many analysts does Warren Buffett have on the payroll? I thought so.
How is Arya? Know someone there and seems pretty happy and turnover seems low, but seems to fly under the radar
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