Tech vs Hedge Funds
What do you guys think about tech vs hedge fund quant jobs? It seems to me that at least in the past 10 years, the promise of hedge funds isn't paying off. Tech is starting to pay better and better and better and the exit options are way better than a fund. The sun seems to be setting on the Wintons, the AHLs the Brevan Howards, the GSAs, the GAMs, the BAMs, etc. It seems to me that the idea of hedge funds - a few smart people with an edge in some area making money and sharing the profits is no longer valid. If anything a tech startup seems to be truer to this idea than a hedge fund (even the startup ones).
This conversation happens every few months (maybe weeks) on this forum.
HFs are higher vol with higher upside. If you are good (ok maybe great) and have some luck (as teams can get cut due to poor senior people, etc) you will do better at a HF. The strong players in that industry continue to be strong and attract assets, clients, and fees.
Tech (outside of startups) is lower vol, lower ceiling, but better lifestyle and stability. If you are good/great here you’ll be capped lower (ignoring the complete outliers) and it is less meritocratic. You will rarely see a 30 year old in tech making $2-3mm. While also rare in HFs, when you have direct PnL it becomes easier to argue for this.
Of all the people I know, the highest earners are successful at funds, prop firms, or similar. The tech firms are good, but a noticeable difference in pay.
That being said, I’ve never had a friend or acquaintance fired from a tech firm, very different story in finance.
PLenty of people have been fired from tech. Amazon is infamous for putting SWE on pip as an excuse to reduce headcount.
30yo on 2-3MM is unheard of in tech, unless your name is Ian Goodfellow and he was at the right place, right time with deep learning taking off. There are maybe less than 10 people on a similar level.
However, even in hedge funds this is extremely rare. Its the equivalent of a very successful PM running a small 200MM book. And outperforming every year. Not to mention career risk, I've seen way too many analysts that think they know what they're doing, go to citadel and last 18mths.
I think a fairer comparison would be a senior/principal engineer at FAANG on the individual contribution track. If you include stock appreciation they're probably pulling ~500k. Analysts (in quant and L/S) are probably at this level if we're looking at median.
Other companies being fired is certainly less (though not impossible!)
I think once you get to higher levels, so beyond level 5/6 for FAANG vs senior quant (3+ years with models producing PnL) totally agree, there's no comparison.
I would argue though at that level, where you indicate (30-50% less comp for equivalent FAANG) the quant must be linked to PnL and has working models. No one can really argue with this, at that point you always have a PnL, Sharpe, etc to point to at the end of the year and if you don't get paid you walk.
What balances that out though is career risk: model degrades, unscrupulous PM steals your strategy and fires you, you don't get the payout you deserve, netting risk etc not to mention employers suing (I've seen it way more than I expected; certain quant firms are more amenable to this strategy even if you don't work for a direct competitor), or just bad luck say if another firm that offers higher payout but goes belly up.
I have witnessed several experienced quants with working strategies, high sharpe, decent capacity, yet can't find a seat. They end up getting really crap deals as subPMs and never really actualize the full earning potential of all their hardwork.
As a hypothetical, if you have a strat that can do 100MM GMV, 5% return, 3+ Sharpe that's a really great pay day. But then you have to find a subPM seat, then you have to negotiate payout, then you have to hope that the PM doesn't fire you after you implement it etc
Don't want to make it sound like its impossible to do the numbers you said, certainly people are pocketing that amount. Just want to lay out that even if you have the smarts and the work ethic there are still obstacles that prevent you from capitalizing.
The whole point of the thread is exactly this. There are a lot of people in systematic/quant finance who want to do research and after years of hard work realise the shit that research is. First, let's start with interviews. You have a lot of fake interviews. You get invited for an interview but really they are just trying to extract info out of you. It's very annoying and can eat away at your confidence - sometimes you can tell they're just trying to extract info, sometimes you can't. When you get hired, you might end up in a shit team that gets canned the following month - explain this to your next employer. Even with a decent PM it's a tough gig and you're always running the risk that you get fired soon after coding up all the strategies you've developed. This also means that these strategies are now less valuable. And even if you have some amazing deal and conditions, research is a very emotionally exhausting game. So really, there are few quants getting paid the numbers I've read on this forum.