Starting a career at Hedge Fund vs. BB Investment Bank
I have a return offer at a mid tier BB Investment Bank in a relatively respected group and was recently given an offer at a quant hedge fund -- think JS, Jump, Citadel Securities. I was hoping to hear some insight about the difference between a career as a trader at these more quant based hedge funds compared to a career at a more traditional L/S Beta Neutral hedge fund.
Most notably what are the differences in comps at the entry level of a L/S fund as an associate (something it seems like takes a few years of IB to break into) vs. junior trading roles at a quant fund. Also, is there a difference in upward mobility?
My lean towards taking the IB offer is solely driven by the fact I will better position myself to get to a L/S fund one day whereas the trading role will likely be too execution-based to give me the background required for one of those jobs but it is still a great firm and I imagine a career down this path has its benefits as well.
Any insight is appreciated, thanks.
First thing to note is that JS/Jump/Cita Sec are not technically hedge funds. There is a distinction between HFs and prop/market-makers.
As you know, they are very different paths, and it will be difficult, if not impossible, to jump from L/S equity to JS/Jump/Cita Sec (and vice versa).
JS/Jump/Cita Sec is more "prestigious" and selective as far jobs out of undergrad go. The starting comp will be higher. Obviously long-term planning is most important though.
Are you equally indifferent between fundamental equity L/S and more systematic/quant market-making/trading styles? Success can be achieved in either. Ultimately where you will be more successful comes down to which one is better oriented for your skills & interests. Which type of approach to making money in financial markets is more compelling to you?
From my experience, it's rare for someone who has the qualifications for the likes of JS to be strongly interested in and compelled by the fundamental equity L/S framework. Your quant skills will not offer you much edge over the people you'd be competing with in the equity L/S space.
What are your thoughts on with the rise of quantitative analysis to support fundamental research (ex. "Quantamental" trend). I noticed citadel has a division built around this and it's starting to become fairly popular. Do you think its just a short term trend or could OP successfully build a career around that niche?
Yeah, I think it's possible. The thing is, the way this industry works, you start your career and are trained to be just quant or just fundamental. There's few--if anyone--doing both types in proportions that are anywhere close to equal (correct me if I'm wrong).
My impression is that the attempts at quantamental end up leaning heavily towards one side or the other (i.e. mostly fundamental with a few quant elements or mostly quant with a few fundamental inputs). I know there are teams where quant analysts support fundamental PMs and vice versa. The idea is that quants should do what quants do best, and fundamental guys do what they do best. Ultimately the term "quantamental" is not well-defined, and it's up to the fund to determine how the elements work together. So, under that broad definition, yes, I think "quantamental" should be here to stay. Someone actually involved in such strategies may have better insights.
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