Top LO AM culture, comp, exit opps, etc.
Although I’m going into a PE internship, I’m really interested in the public markets. I’ve been involved in public equity internships in the past and have really enjoyed them due to the increased time allocation of diligence and thesis-building, all intellectually stimulating. However, I know there is less transactional experience, so you essentially box yourself into a more specialized role (less deck-building, less advisory experience). How are you all thinking about this? I’ve heard the top LO AM (Fidelity, Blackrock, etc.) pay similar to good BBs and as you move your way up it’s more similar to PE / HF, maybe slightly lower but overall really similar with far more work autonomy. The exit opps tend to be other LO AMs or long-only HFs, but there are a good amount of examples that have gone to good L/S HFs (I.e. Coatue). How do HFs and VCs view experience at these top LO AMs?
Based on the most helpful WSO content, transitioning from a Private Equity (PE) internship to a career in top Long-Only Asset Managers (LO AM) like Fidelity or BlackRock can indeed be a strategic move if you're passionate about public markets. Here's a breakdown of culture, compensation, and exit opportunities at top LO AMs:
Culture: The culture in top LO AM firms is often described as intellectually stimulating, with a significant focus on research, diligence, and thesis-building. Compared to the fast-paced and transaction-heavy environment of PE, LO AMs offer more autonomy and a deeper dive into market analysis. This environment is conducive to those who enjoy a thorough examination of companies and markets over the long term.
Compensation: Initially, compensation at top LO AMs is competitive with good Bulge Bracket banks, and as you progress, it aligns more closely with PE and Hedge Funds (HFs), albeit slightly lower. However, the gap narrows with seniority, and the compensation package often includes significant performance-based bonuses, making it quite attractive.
Exit Opportunities: While it's true that transitioning from LO AM to other sectors might be more challenging due to the specialized skill set, there are still ample opportunities. Exit paths typically include moving to other LO AMs, long-only HFs, and occasionally to Long/Short HFs like Coatue. Experience in top LO AMs is highly valued by HFs and Venture Capital (VC) firms, especially if you've demonstrated the ability to generate alpha through your investment picks. The analytical and research skills honed in LO AM are transferable and can be particularly appealing for roles in investment analysis and portfolio management.
Special Considerations: It's important to note that while LO AMs offer a more stable work-life balance and the opportunity to deeply engage with investment philosophies, the trade-off comes in the form of less transactional and advisory experience. However, for those deeply interested in public markets and long-term investment strategies, the benefits can outweigh the drawbacks.
In conclusion, if your passion lies in the public markets and you thrive on intellectual challenges related to investment research and strategy, a career in top LO AMs can be both rewarding and fulfilling. The skills and experience gained can open doors to a variety of roles within the investment management industry, including prestigious HFs and VCs, albeit with a focus on those valuing deep market analysis and research capabilities.
Sources: Asset Management vs Investment Banking for exit opps into value-based hedge funds, Hedge Fund: The Investment Life Cycle, Why Work in Asset Management?, Life as a Top Asset Manager, AM vs HF: The Business of Our Business
Jumping is always possible, especially early in your career. I think the older/longer you spend at LO, the less likely those L/S exits become for two reasons:
1) comp to lifestyle ratio at LO is pretty much unmatched if you’re at a good fund and tenured enough to be confident you’re not going to get fired. When you’re in your late 20s/early 30s and start to have a family and plan for the future/downside becomes more painful, the risk of trying to jump ship for potentially better upside becomes less and less appealing. Certainty of being able to make mid-high six figures indefinitely is quite attractive vs shooting for 7 figure paydays with relatively high likelihood it is short-lived.
2) also as you stay longer at LO I think L/S funds are just less interested in your skillset/you get pigeonholed into the strategy. Investment styles aren’t fully compatible not to mention not having experience shorting professionally.
is jumping still possible from London to NYC?
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