What's so attractive about joining an MM HF these days?

Given that MM's usually super stressful environments, easy to get fired, and (unless u are a top PM) u won't get highly paid relative to hours/stress why would anyone want to join it?  In addition, even if someone is "passionate" about the markets wouldn't it be better join an SM?  Less stress (yes I know D1 analysts aren't exactly coasting @ Solow) and being able to dig deeper to companies instead of talking to sell-side and trying to forecast quarterly estimates (stock may not even react well even if actual is higher than analyst estimates).  

Or do people just join MM HF cuz it's the only offer they get?

Comments (33)

  • Analyst 1 in IB-M&A
Jan 18, 2022 - 3:03pm

more seats because of more turnover especially at analyst level?  Also, a bit unrelated but wonder how MM PM lifestyle is due to volatile nature of career especially those with families. 

  • PM in HF - Other
Jan 18, 2022 - 4:17pm

Depends where you are in your career and opportunities available. This site has a lot of the "outliers", but can tell you majority of MMHF have adapted and know are they up against corpdev/tech/etc. So "guaranteed" comp will be higher at MM for sure with upside from there. 
Also as mentioned path to PM easier cause MM are in a constant state of growth. 
 

Jan 18, 2022 - 7:21pm
wsomonkei, what's your opinion? Comment below:

I think a large factor many people on this forum value highly is the idea of stability and risk aversion, hence why the IB -> PE -> MBA path is appealing. You have some idea of what the future looks like. Yes, working at a SM is going to be a "safer" job than working at a MM, but you may never become a portfolio manager in those seats. Your ideas may not fit with those above you and that can be frustrating. For individuals who want that freedom (with the caveat of the firm's style like factor neutral), a career at a MM can be a great way of having that autonomy.

  • Analyst 1 in IB-M&A
Jan 18, 2022 - 7:24pm

I think some people on this forum would rather stay and become a Senior Analyst/Sector Head than try to gun for PM as quick as possible no?

Jan 18, 2022 - 8:00pm
wsomonkei, what's your opinion? Comment below:

Absolutely. There's appealing aspects to both but some prefer one over the other. There's no true one best job, just what some prefer.

Jan 19, 2022 - 8:29am
GrindingItOut, what's your opinion? Comment below:

If you want to be a PM - you think you have alpha, you value the independence, you're shooting for the moon / become the next billionaire - then MM is a fast track. Be good / get lucky for a few years and you have a shot at big bucks. Easier than doing the same thing at a SM, but with less support and teaching.

If you want stability, don't think you have alpha on your own, don't mind working in an organization and will be content to be a sr analyst pulling in high 6 figs - low 7 figs go to a large SM if you can hack it.

I've also seen people kind of fail out of a SM role / get stuck in a low level position and lateral over to a MM to reboot their career (mid-late 20s). At that point if they fail again they often transition out of public markets (go do vc or tech or crypto or some other weird shit)

Jan 19, 2022 - 1:44pm
Bill Pacman, what's your opinion? Comment below:

MMs are more meritocratic and so the best can rise faster. Definitely luck involved but the luck in an SM plays a bigger factor. If you have the chops their measurement on alpha at MMs is more rigorous so you can measure your real "skill". Unfortunately, most don't have the chops, including many from the successful SMs.

Jan 19, 2022 - 2:46pm
rumplestiltskin, what's your opinion? Comment below:

If you are legit, you will rise quickly or have no one to blame but yourself.  The guys who run the best ones are amazing at evaluating talent and scaling up those with edge.

It's about as pure a meritocracy as life gets.

Jan 19, 2022 - 3:51pm
LinkedInPremium, what's your opinion? Comment below:

More of them in existence and more of them than ever are hiring. That's why. Also, easier to generate alpha with a smaller fund.

Array

  • 1
Most Helpful
Feb 3, 2022 - 1:54am
Anchor, what's your opinion? Comment below:

Have been in both and when coming out of college I always drank the single manager cool aid. I was wrong. Probability-weighted pay is prob similar at both. At MMs you take a gamble on yourself. The transparency, objectivity, portability is something I did not appreciate at first. It is hard to manage in that model, but it's not like their models stop at a quarter - solid MM PMs could be duration and take a tilt if they had a dif mandate. SM PMs imo surprisingly often act dismissive of factors and or positioning while at the same time expressing just as much anxiety about day to day moves - just with a lot less coherence. 
 

Somehow it feels like many SMs (not all) always find a reason not to pay a the end of the year and a less portable/verifiable record does impact your ability to shop. At MMs of course they also find a way to not pay, but that's usually only your last year.

The best thing about SM is being a generalist and not having to do all the quarterly maintenance stuff. Best thing at an MM is (to some extend) your returns are your proof of ability and can overcome any 95% of politics / pedigree / dogma etc. 

There are exceptions to every rule of course. 

  • Research Associate in HF - Event
Feb 4, 2022 - 1:07am

what made you switch your stance on the initial kool aid bias you had? If I'm being honest, I have that same bias but lack of conviction in being able to generate alpha within the tight risks limits is likely the biggest reason why haven't been able to turn off my internal bias against MMs. Would be curious to hear your moment / thought process as you left SM and now seem to have a successful career at MMs.

Feb 3, 2022 - 3:19am
Anchor, what's your opinion? Comment below:

There are people doing deep creative work at MMs and many many people doing doing finger-the-air back of the envelope 3-expert-calls-and-an-email pitched at SMs.

"Deep" research is very often overrated. Everybody talking to the same 5 experts, Google trends and literally 1 store visit if that. When I was at an MM it was laughable how little the generalist tourists understood my sector / companies "but we have an outsiders view!"

What you should be looking for is not deep research but CREATIVE research. I see it most often from neurotic short sellers and under the radar funds. Creativity mean differentiation, which means edge which may or may not mean alpha. MMs generally find less edge and isolate that alpha. The best teams find something repeatable and get creative both with data and with their process. It's harder to find a variant view or process on a short term, but if you do find one - are you allergic to taking that money because it's beneath your intellect?

Both jobs are fun for passionate people. Maybe SM guys a little more philosophy-ish and MM guys a little more mathy/analytic. Researching is fun. Trading is fun. I favor the indignant neurotic short-seller, but less so the publishing ones. There's a role for all personalities. You'll have fun if you're winning, nothings fun when you're losing. Also, it's one of those "cross that bridge when you come to it" things. In banking I came out of the gate and declined 2 of the platforms, those greasy charlatans. Probably one of the dumbest things I've ever done, they have great programs for the juniorest people.

  • Associate 1 in IB-M&A
Feb 4, 2022 - 4:50pm

Swear doing more calls is pointless unless you're doing an activist campaign. Everything is all macro and factor driven these days.

Feb 4, 2022 - 11:19am
sick_willy, what's your opinion? Comment below:

Have only worked in MM HF and PE, but I think it comes down to risk reward & job security like others have said. MM is no hand holding and you're more or less on your own with a pool of capital. It's very entrepreneurial and there's no investment committee, etc. 

Feb 9, 2022 - 11:14pm
Fill-or-kill, what's your opinion? Comment below:

MM is way more exciting if you are entrepreneurial, are highly competitive, and have a whatever-it-takes attitude. SMs are less intellectually rigorous and there's far less adrenaline/stress. However, if you prefer to focus on "investing in an industry" then I think SMs make more sense as you can really help to nurture and shape companies. 

Feb 10, 2022 - 12:49am
Fill-or-kill, what's your opinion? Comment below:

Not really. I think the job sucks if you come in without a very good grasp of modeling and some ideas on how to build an edge on forecasting quarterlies (or knowing when you don't), especially if you're not inspired by your coverage. For larger pods with more structure there is more mentorship, but because most teams run lean, you are starting off at a very fast pace. Would recommend someone spending 3-6 months PRIOR joining an MM learning how to model quarterlies with granular revenue builds (obviously not every line item is important, but IDing the critical factors and then finding leading indicators, if possible, is key).

  • Analyst 1 in IB-M&A
Feb 10, 2022 - 11:36pm

multi-manager and single manager. multi-manager as the name implies means multiple managers running money for the overall fund.  single manager just means one main boss running the show with analysts.

  • Intern in HF - Other
Feb 11, 2022 - 12:51pm

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  • Analyst 2 in HF - EquityHedge
Feb 14, 2022 - 4:25am

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