Turning down a top HF offer?
I am recruiting for and in the late stages of multiple top 10 HFs. My other option is to accept my buyside roll at a bulge bracket bank that is more general investing and does not pidgeon hole me into one type of asset class.
Although I understand that HFs, especially top "name-brand" firms are more prestigious and pay significantly more than investment management at a top BB, I am somewhat worried about skipping a crucial learning period and jumping right into a technical and specialized role that might not prepare me as well for the broader set of exits.
Although it is completely possible that I do not get one of these HF offers anyway, I am wondering how people compare a "better job" in terms of pay and prestige at a HF to likely better training and a better understanding of multiple asset classes at a BB where name brand is still elite.
Should I prioritize where the training is best for early career? Or jump on a possible opportunity that I would hope to get down the line anyways?
All help and context is appreciated, thank you.
This is a classic dilemma, and based on the most helpful WSO content, here’s how you can think about it:
Training and Skill Development:
A buyside role at a bulge bracket (BB) bank offers broader exposure across multiple asset classes, which can be invaluable early in your career. This type of training can provide a strong foundation, making you more versatile and better prepared for a variety of future roles. Hedge funds (HFs), on the other hand, often require you to specialize early, which can limit your exposure to other areas of investing.
Prestige and Compensation:
Top hedge funds are undeniably prestigious and offer significantly higher pay compared to BB investment management roles. However, prestige and pay should be weighed against your long-term career goals and the type of investor you want to become.
Exit Opportunities:
A BB buyside role can keep your options open, as the broader training and exposure to multiple asset classes can make you a more attractive candidate for a variety of roles down the line. HFs, while prestigious, can sometimes pigeonhole you into a specific strategy or asset class, which might limit your flexibility for future exits.
Risk vs. Reward:
Jumping into a hedge fund early in your career can be risky if you’re not fully prepared for the technical and specialized nature of the role. If you feel that the BB role will better equip you with the skills and confidence needed for long-term success, it might be worth prioritizing that over the immediate prestige and pay of a hedge fund.
Personal Preference and Career Goals:
Ultimately, the decision should align with your career aspirations. If you value a strong foundational training and broader exposure, the BB role might be the better choice. If you’re confident in your technical skills and are drawn to the high-stakes, specialized nature of hedge funds, then pursuing the HF opportunity could make sense.
In summary, prioritize the role that aligns best with your long-term goals and where you believe you’ll gain the most valuable experience early in your career. Training and versatility often outweigh short-term prestige and pay, especially if you’re still exploring your interests within finance.
Sources: https://www.wallstreetoasis.com/forum/investment-banking/qa-md-in-ma-and-capital-markets-with-bulge-bracket-and-boutique-experience?customgpt=1, David and Goliath: The Boutique and The Bulge Bracket, Dietitian to Investment Banking?, Prefer Elite Boutiques or Bulge Brackets?, https://www.wallstreetoasis.com/forum/investment-banking/why-go-from-elite-boutique-to-bulge-bracket?customgpt=1
T10 HF is very subjective but I would take it in a heartbeat. More often than not, Investment Management at banks tend to be less hands-on investing, and you won't get the experience you're wanting out of it either way. If it were a reputable PE firm, that'd be a different story and a very good case to take over the hedge fund but otherwise, I don't see why you shouldn't do it.
Thank you for the feedback
Need more information to provide any type of tangible input to help make a decision. Is it a BB's AM arm where it's a wanna-be long-only mutual fund? Or is it GS SSG / some merchant banking arm where you will get good training. Is the HF the type of strategy that you think you might be interested in? I.e., pod vs SM ; credit / equity ; activism / long-short; etc. Does the HF have a training program in place. If it doesn't, are you proactive enough to figure things out on your own or would you benefit from a structured program for a few years? Does the HF have a career-track or is it full of lifestyle Analysts and what do you want?
GS SSG does not exist anymore. That was a flexible capital structure solutions provider using GS balance sheet $ where huge risks were taken and big rewards were paid out to the capable senior guys. For two reasons (Dodd/Frank principal investing restrictions on broker/dealers, strategic decision to wind-down balance sheet size because it is low-multiple and replace it with high-multiple fee-generating asset base) it's been replaced by a toothless asset management business called hybrid capital. This is basically a risk-averse preferred equity investor focused on asset gathering to generate fees to boost the AM business (and thus the GS stock price). Target is mid-teens IRR, nothing crazy
I have friends who were on this team and the approach is risk-off, the comp is IB level or worse and the team does not have the same talent as SSG used to back in the day, most of those guys are on the buyside now. Merchant banking also wound down, there are just private equity funds now which underperform your average SP500 index (materially) and have a million iterations on any idea before it is taken to internal investment committee.
As to your question: if the top HF is a ruthless pod-shop (Citadel, Millennium, etc.) then you should pass on it. Those are not good places to work until and unless you have adequate training and can succeed, there is no patience and it is sink or swim. If it is something like Pershing Square or TCI, that's a no-brainer and you should absolutely accept, most if not all the junior monkeys in banking are there for an opportunity like that.
lol BB AM is where you go to retire, not pick up new skills with “elite brand name.” Wanna be mutual funds is a great way of describing them
I am curious why you think BB AM is not a great place to start. As someone who is still figuring out which asset class(es) and strategy types I am most interested in, I thought of BB AM at a firm with well respected training might help me learn more about my interests/strengths. Would you still suggest starting at a HF if possible and figuring out more by doing?
ngl but you sound like a blithering idiot (“top 10 HF, brand name BB”) and therefore prob a good fit for sleepy AM setups.
Could you give us a bit more detail to work with? What’s the setup of your AM role? Is it rotational? Will you actually be exposed to multiple asset classes and sectors? Which team will you be on eventually, do you get to choose?
The HFs you are in process with, are they pods? Scaled single managers? Generalist roles? Specialist by sector or asset classes? Like cmon bro stop asking the same exact question over and over again without more details. Makes it impossible for ppl to give real input.
Also someone above already said more details are needed and yet you have given nothing more. D- for reading and execution skills so far, just go to the wanna be mutual fund if this is an accurate representation of your cognitive capability.
T10 HFs lol? You probably shouldn’t work at a fund if you think there’s an actual T10
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