Why do SMs seemingly have more conventionally "cracked" backgrounds than MM?
Trending Content - Hedge Fund Forum
Career Resources
WSO Free Modeling Series - Now Open Through
June 30, 2026
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
High Finance Applications
Guaranteed
Get at least one offer GUARANTEED
- 1:1 support
- 92% success rate
- 2,000+ mentor network
- Unlimited Live bootcamps
- AI for resume + LinkedIn
- Networking automation tools
- HireVue simulation tool
- Full course library
- Private Slack community
- 20hrs of mocks
- + much more...
Based on the most insightful WSO threads, the difference in backgrounds between SM (Single Manager) and MM (Multi-Manager) hedge funds can be attributed to the following factors:
Recruitment Philosophy:
Top SM hedge funds often prioritize candidates with "cracked" backgrounds (e.g., Ivy League schools, elite investment banks like GS/EVR, and prestigious private equity firms like KKR/BX/APO). This is because these backgrounds are seen as proxies for strong analytical skills, rigorous training, and a proven ability to excel in high-pressure environments. SMs typically have smaller teams and longer investment horizons, so they place a premium on hiring individuals with a track record of excellence and deep expertise.
MM Hedge Fund Structure:
MMs, on the other hand, operate with a different model. They often have larger teams and shorter investment horizons, focusing on high turnover and rapid decision-making. This allows them to hire from a broader pool, including candidates from IB, ER, or even less traditional paths. The emphasis is more on specific skill sets (e.g., building variant theses, alternative data analysis) rather than pedigree alone.
Risk and Responsibility:
At SMs, analysts and portfolio managers often take on more concentrated risk and have greater autonomy in decision-making. This makes it critical for SMs to hire individuals with a proven ability to handle such responsibility. MMs, with their pod-based structure, distribute risk across multiple teams, which can allow for more flexibility in hiring.
Perception and Branding:
SMs often compete for top-tier talent to maintain their reputation as elite institutions. Hiring candidates with prestigious backgrounds reinforces their brand and attracts investors. MMs, while still competitive, are more focused on performance metrics and may not weigh pedigree as heavily.
How Much Weight Should You Put on "Cracked" Backgrounds?
When choosing a seat, the weight you place on "cracked" backgrounds should depend on your career goals and the culture of the fund. If you're aiming for a long-term career at a top SM, having a strong pedigree can be advantageous, as it aligns with their hiring preferences. However, at MMs, performance and skill often outweigh background, so a less conventional path can still lead to success.
Ultimately, focus on developing the skills and track record that align with the fund's investment style and culture. While pedigree can open doors, consistent performance and adaptability are what truly matter in the long run.
Sources: Questions about Single Manager vs Multi Manager HFs, Single vs. multi-managers, MM to SM is it possible, Point 72 vs Blackstone
SMs tend to value marketability a bit more. Think raising capital with a IB/PE-like fundraising slide where they include headshots and logos of where the team came from.
MMs tend to be more pure performance driven, ie. increase hiring and firing velocity (indirectly widening the net), and whoever survives is likely to be a moneymaker.
My personal experience is that guys with good backgrounds are better than those without on average, especially at junior level. Though this is not a 1:1 relationship, more like 60/40. Once you get higher-ranking, many of the true PnL printers come from more varied backgrounds vs juniors
In terms of choosing a seat, if you had to pick between 2 PMs with ~10 yr work exp:
A) Top IB -> Top PE -> MBA -> Tiger Cub -> now at MM for 1 yr
B) 3rd tier bank ER -> big MM as an analyst/associate promoted to PM internally or through limited moves to other MMs
I would personally pick person B every time. Obviously this is MM-biased but if both people moved to your favorite SM, I’d probably still pick B to work for. Reality is, at the same age, person A has spent a lot of time doing stuff that has limited carryover to your teams PnL potential
It’s so it’s easier to filter down people. SMs are lean and don’t have the time and resources to interview everyone under the sun. Big pod shops got an army of recruiters.
I think people overthink this. PE skills aren't very translatable to MMs and people that went to PE usually don't like MM style of investing, or they go to an SM to get public markets experience before going to a MM to take bigger risk
What people think of "cracked" backgrounds is the PE associate path vs someone who went to a MM from undergrad
Who would you rather (try to) be? No right answer, but depends on who you ask and what kind of risk you want to take
IB 2 yrs -> PE 2 yrs -> SM HF
MM 5+ years
Who cares? Whoever makes the most money is the most cracked lol
Whoever makes the most money cracks the most too ;)
Here we go again, every month, like clockwork
bump
tf else you wanna know
There's no way to really know who is better or worse with any confidence. There's massive error bars. What you can be certain of is that pedigree is marketable. Why not hire someone with a base case of "this fills out my hire portfolio and looks good" and make actual on the job performance upside? Ideally, you want a good target mix of banks, races, genders, PE firms, vibes that all look good.
I would think of it like casting for a movie. All else equal you want people who are good looking because that will bring more people to watch the movie. Probably whether or not someone is a good actor is somewhat subjective and the audience may not be able to tell small differences anyway. Also, what are you going to do? Watch 100 hours of movies to carefully evaluate their skill? Too hard. Pick the hot one.
I think it’s so funny how SMs market themselves as having “differentiated” investment processess. They hire the same 2+2 candidates and own the same compounder type names.
Voluptas consectetur sint rerum consectetur. Quas ipsa vero tempore dolorem sit illum. Omnis mollitia velit quos sed ut voluptatem ipsum.
Delectus aut mollitia suscipit consequatur. Atque qui corrupti excepturi maiores quae eligendi. Cum praesentium iure et ut ut voluptatem autem. Ut iusto cupiditate dolor fugiat dolores quae. Illo numquam quis error. Non ipsum ex officiis ipsa occaecati.
Fugiat quis rem sed aut. Quidem quia sit voluptatem voluptates. Laudantium odio voluptatem aut molestiae eos rem et. Deserunt nemo similique consequatur ut et. Et assumenda magnam sunt aut incidunt quidem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...