I am currently a 3-yr associate of ER dept at a top BB in Asia. My sector is financial and I have covered stocks for 1-2 years. If everything goes smoothly this year, I am supposed to get my VP title at end-2010.
I am recently approached by a tech-focus LS HF which plans to expand its investment scope to non-tech sectors (e.g. financial, consumer, etc). Initially the HF will attribute a small portion of AUM to invest in non-tech stocks and the ultimate goals are to build a good track record and launch another fund later.
Factors that I consider:
1. I expect no base salary cut if I change the job now. However, the base salary of a VP, which I should be able to get in 1 year, should be 50% higher than what I get now.
2. I cover a tiger economy's financial sector now. If I shift to that HF, my responsibility will be regional financials with focus on China.
3. My long-term career goal is to become a PM, but not necessarily at HF.
4. The HF's AUM is around $800mn.
Would you take the offer If you were me? Any missing factors that I should put into consideration?
Has the LS HF already hired a PM to cover non-tech sectors? If not, you run the risk of that hiring process dragging on for a long time while you sit idle. In most hedge funds, your PM allocates a portion of his cut of P&L to your bonus. You do not want to be an orphan drifting on your own while the HF looks for a financials PM.
What is the net fee capture rate at the fund? Net fee capture = MGMT fees / AUM. Some funds 1bn have very low net fee capture as a result of granting (sometimes deeply) discounted fees to early investors. Low net fee capture at a small fund can be destabilizing to the franchise. On this topic, note that an $800mm fund typically hasn't reached "critical mass" for a fund (critical mass for a long/short is around $1.5bn to $2.0bn)
Assuming you would join the LS fund in an intermediate level analyst role, would the fund be willing to offer you career-enhancing opportunities such as a carve-out fund (~$10-30mm of assets to invest as a mini-PM) in the future? If not, it will be harder for you to break into the PM phase of your career without jumping to a new shop.
Pre MBA right? If so, then stay in research for a few years as a VP and you could very well end up running your own portfolio for a large HF if you are good in a few years.
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