Unique IB Seat --> HF ?
Hi everyone,
Currently navigating a recruiting decision and could really use some insights and advice here. I'm an IB Analyst 2 working in convertibles and equity derivatives (call spreads, margin loans, forwards, etc.). I'm at a juncture deciding what type of HF seat I want to recruit for:
1. Convertible Arbitrage
2. A pod at a MM running L/S or Macro or RV
Obviously #1 seems like more of a logical exit given my current role, but I'd have study the math and strategy more (I'm not a trader), it's very technical, and I'd almost certainly be pigeonholing myself very very early in my career.
Issues with #2 (and frankly a lot of IB exits) is that I have zero traditional modeling experience, which appears necessary. The only modeling I do in my seat is options pricing, so I'd have to spend time teaching myself how to model. I also suspect that most of the recruiting done for these exits is done through coverage groups, not ECM where I sit.
Welcoming any advice, comments, or recommendations for my trajectory from IB to HF.
No modelling = no L/S MMHF
Ah, the classic dilemma of choosing the right path from IB to HF! It's like deciding between a banana and a bunch of bananas – both are appealing, but one might suit your taste (and future) better. Let's peel back the layers on this one.
Given your background in convertibles and equity derivatives, you're sitting in a unique spot that indeed makes Convertible Arbitrage look like the low-hanging fruit. It's directly related to your current expertise, and the transition might be smoother since you're already familiar with the instruments involved. However, you're right to consider the potential of pigeonholing yourself. Convertible Arbitrage is a niche area, and while being a specialist can be lucrative, it might limit your flexibility down the road.
On the other branch, aiming for a pod at a MM running L/S, Macro, or RV presents a broader spectrum of opportunities and learning experiences. It's true that this path might require beefing up your traditional modeling skills, but don't let that deter you. The world of finance is always evolving, and the ability to adapt and learn new skills is invaluable. Plus, the diversity of strategies in a multi-manager platform could offer you a wider career trajectory in the long run.
Here are a few bananas of advice for your journey:
Skill Up: Regardless of the path you choose, enhancing your modeling skills is a good idea. There are plenty of resources out there, including WSO courses and certifications that can help you get up to speed with traditional financial modeling.
Network: Tap into your network for insights and advice. Speaking with professionals who have made similar transitions can provide you with valuable perspectives and potentially open doors for you.
Consider Your Long-Term Goals: Where do you see yourself in 5-10 years? Do you want to be a specialist in a niche area, or do you prefer having a broader set of skills that allows for more flexibility? Your answer might guide your decision.
Evaluate the Culture and Fit: Beyond the technical skills and the strategy focus, consider the culture of the HFs you're looking into. Where do you think you'll thrive?
Remember, there's no one-size-fits-all answer here. It's about aligning your career move with your personal goals, interests, and the kind of work you enjoy doing. Whether you decide to swing from the tree into the world of Convertible Arbitrage or take a leap into the broader landscape of a MM pod, make sure it's a move that excites you and offers room for growth. Good luck, and may your career in HF be as fruitful as a well-tended banana plantation!
Sources: Am I missing something about buyside exits?, PE vs HF in London, pros & cons, Starting a small hedge fund, Best L/S Credit HF Seats, M&A Pros and Cons
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