What to do?
Hello folks - wanted thoughts from anyone in the space:
Wanted to see of any advice on career moves and thoughts around if/when to make a jump, or where to focus opportunistically on next steps to take my career to the next level.
My background: currently an analyst (quasi-senior) at a small SM L/S < $500m in AUM, lean investment team which means I am essentially the most senior, non-PM member. Have ~5% points in the fund. Joined out of college ~3-5 years ago. Coverage is generalist, so touch everything ex-healthcare. Base is > $150k but < $200k. All-in given returns have been OK.. been pulling in annually north of $300k but south of $500k on the last 2 years, and base has gone up every year by 10-15%.
Pro's: I love the work, flexibility of coverage, and style of investing. PM is a smart guy with a proven track record. WLB fwiw is phenomenal and can be flexible there as well. Duration is longer than most MM-style investing. FAIR on comp but will address this in the con's section. I have nearly full discretion over my coverage (> 70+ names) and can ask to put on trades almost immediately when I choose, with the limit being I am not the executing trader and not managing PnL directly every day. And then lastly I like my team, culture is good, and I'm pretty good at this job (not to be cocky).
Con's: AUM growth has stalled, raised some money but even amidst strong returns haven't caught as much AUM as one might expect with the strength in returns. This puts a slight cap on the earnings potential given I have points, but one could argue it's a call option if we ever do raise more. Comp is great for my age but weak for my tenure in the industry. I have close to 5 years of L/S buyside experience and those I know across both SM/MM with that level of experience are usually making $200k base and north of $450k all-in annually. And the only other con is I'll never be the guy to take it over (no one will), so until I am experienced enough or good enough to do this entirely on my own at scale and/or grow a track record, I have to be at best #2. Which is fine until it's not, I am still fairly young.
Think just trying to figure out how to best optimize for both NT and LT opportunities. I'd love to manage capital and do essentially what my PM does. Our strategy offers a ton of flexibility and I cherish that amidst volatile markets, and it's been a driver of outperformance these last 5 or so years. That said, is there $ being left on the table both short and long-term? I don't know what the upside looks like here from a comp perspective. There's mortality risk (Citadel won't go under but we could if things go south *knock on wood*).
There's definite earnings $ upside here but at a fairly slow trajectory and one that is at the entire discretion of my PM, who as I said is certainly fair (I am overpaid relative to my age), but I seem underpaid relative to peers of similar experience. I'm also at the whims of our returns.
Any advice or general conversation would be helpful.
I have been in your exact seat and would strongly recommend moving to a large or branded institution if you are set on developing into a PM. I know it can be difficult and the inertia is tremendous, especially since you like the work and are getting paid enough to feel "fine." But two things stand out: returns have just been "okay" and you're a generalist. The former makes fundraising at healthy economics very difficult and the latter makes recruiting later on complicated given the trend towards specialization. At a minimum, I would try to carve out some coverage while you think about it; managed care, aero, something long these lines probably small enough to work.
Ultimately we're all solving for a combination of autonomy, career progression, and pay. At small funds you most likely only get one of these three unless the PM is hiving off a significant amount of fund gross for you to run. At a large firm you can probably count on career path and pay.
DM me if you want.
Hey - appreciate the response.
Hear you on the transition side. The question or better said, reluctance to join a much larger spot is 1) the style is not my favorite, especially at this juncture.. meaning I don't really love the idea of having to run net neutral and pair trade 30 names, 2) for what it's worth (and I know this isn't the best optimization for a career) but I do enjoy the flexibility of being a generalist and it has contributed to our ability to drive returns, and 3) the likelihood and/or probability of starting off as an analyst and moving internally to PM. #3 I know little about.
I figure over time I'll have to ultimately specialize, and that said my "generalist" coverage is truly industrial/consumer/TMT - so most roles at MM shops I am tapped for tends to be the former.
I'll also add the difficulty I've found in perusing those MM seats is that it'd be at a level that tends to fit those w/ experience of 2-3 years on the sell-side, which might be me being too pretentious but I already contribute like a 2nd in command senior analyst in my current seat and have 4-5 years of experience doing so. It seems as though I am in a bit of limbo in between who MM's like to hire as senior analysts vs. more junior (senior having 5+ years of experience, junior having migrated directly from the SS).
Hopefully this doesn't sound like I'm "above" the MM style at all it's just less compelling/interesting to me from an investment standpoint.
Also was almost identical situation to you albeit a tiny bit more junior perhaps. Decided to move to MM and had to take step down in seniority. Sitting here today think this Q is just very nuanced and depends a lot on what you want. Was not a easy decision for me. What I got out of the move: specialization, brand name, clearer path /high ceiling. What I lost: incredible WLB, stability, good culture, general mental/physical health…. Would I make the jump again, probably yes. But again it’s not a clear cut decision
All very fair points. Imagine the MM jump largely is PM dependent as well but do you have a general feeling of how the hierarchy / time to PM manifests itself? I guess the question would be if I were to entertain the idea of moving to a MM pod, I'd like to at least have a broad understanding (assuming I succeed / do well / pod does well) of on average the timeframe to eventually getting to PM. Don't mind the step back as long as the higher ceiling can be achieved within a reasonable timeframe.
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