When do hedge fund professionals get a portion of the AUM to manage? Is it strictly at the PM level, or do analysts get a "book" to manage as well? I wouldn't want to be just a research analyst, I would want to come up and execute my own trade ideas and have my own P&L.
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You get a book to manage when you earn that respect - that's when you consistently bring money-making idea AND are able to convince your PM to buy it (second part equally crucial).
If you want to have your own P&L right away, try a prop shop, but you will need to have a track record anyways, so we are back to square one on that logic.
Would add largely most people think they're ready earlier than they are, and some folks are also equally happy being the senior analyst until the end of time (better WLB, strong comp, less stress). People don't understand what risking $m of capital feels like and also being wrong, stakes are high and tolerance for mistakes is low, hence severely high turnover in PM seats at high levels. Takes extensive amounts of time and training to bridge the gap effectively from analyst to PM - typically every PM was a pretty strong analyst but not every super-star analyst is a good PM.
But to answer the base question instead of rambling frustrations around generational deficiencies, depends on the fund. Citadel typically is structured in a way that allows their analysts to deploy/manage some risk early on, start building a small PnL within their scope of 20-30 names, increasing in both coverage breadth and AUM slice as they progress. To my knowledge other funds typically can be flat in structure but don't tend to allow their analysts to directly and fully manage capital.
Yeah I can agree with the point about people staying on as a senior analyst rather than going onto PM side. However, I've also seen a fair share of senior analysts eventually becoming PMs because they couldn't handle "just' being an analyst and wanted to actually manage risk. Personally, I'm aiming to be a senior analyst because I love doing research and found out I don't do well with actually managing a position (I've been right over the long term on certain companies but get too emotional and sell out too early in my PAs).
Have a couple friends in that predicament. Usually a sign of working for dickhead PMs who do not value a sr analyst correctly these days. Also some funds where being “right” is more important than “why”. All the legends took care of their “o-line” but lots of ppl get screwed.
So I’m curious, if you’re aiming to never take risk and remain a senior analyst, what comp are you realistically expecting and would it be better than being a MD at a research firm?
I don’t know that one is “better” but if the team is running a lot of $, putting up results, and your analyst work is giving the PM the opportunity to make good decisions, you’ll get paid well.
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