Why would an L/S fund pay interns dramatically above market?
It seems like my friends doing HF internships are all at places that comp within +/-15% of each, but I recently got an offer that's 2x that average from a 1-2b SM fund.
This sounds so stupid and I'm not trying to look a gift horse in the mouth but I can't help but be a bit suspicious of why my shop is paying at/above top quant offers and not other L/S funds.
This shop doesn't do any quant so they're not really competing for talent there. I see people talking about how BBs will always pay just enough to get kids to work there over tech/other/idk and not based on the value they actually provide; this makes sense to me and I expected the same for HF. Part of me feels like it's to bait people in for FT and then not have as much progression, but I have no basis for this. Alternatively, it might just be a massive sweatshop, but again it didn't seem that way throughout the process.
Does anyone have insight into why a shop would comp interns far higher than they need to secure talent?
If you do a halfway decent job, you’re cheap labor.
Why would a fisherman use bait? Yes, you're right, it is to bring in and retain talent in progress to an FT. Why would any HF waste their resources on someone they know is only there for a few weeks/months? As for your question of paying higher than they need to secure talent, that is subjective. But since we're on the topic, if someone had a $10k offer from a HF and $20k offer from a quant firm regardless of the position, the average HYPSW person would obviously go to the quant trading firm, simply because better pay and they start out in a place that is for most people an exit opp. There are HFs that don't even pay their interns and have no interest in retaining talent, some view interns as temporary workforce. There is no single perfect answer for your question, a lot of factors come into play, a HF that is sitting on double digit gains for a given year or quarter is obviously going to outpay its peers when that which is in the red will pay a lot less than some IBs.
What size fund are you talking? Generally comp for UG interns goes: quant trading (prop shop/HF)> L/S fund (Citadel/P72 etc)>>IBD
1-2b SM
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