Why EVERYBODY want to go into PE after IB, and not hedge fund?
Why EVERYBODY want to go into PE after IB, and not hedge fund? Is it because of the difficulty or hours?
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1) Nearly all quality SMs recruit from PE, not IB
2) MMs do recruit after IB, although being market neutral there's less space to ride market beta like SMs do so you have to be actually good to make it to PM. Anyone in PE who's at least somewhat smart can make it to VP/Principal level as long as they navigate office politics and survive the long hours.
It isn’t as common for hedge funds to make as much as they used to back in the 90s / 2000s also.
Edit: yes there are funds that still make very good money, but the market is notably more saturated than it was 20 years ago, and with regulations in the last 15 years they were more profitable before it’s just a fact lol you guys can downvote all you want.
I think the real reason is 1) kids just assume they want PE because all the other analysts are doing it 2) the head hunters push it and most of their jobs are usually PE and 3) it’s more reliable income in that a PE associate’s pay isn’t wildly subject to the volatility of stocks. Lastly, I think the hedge fund crowd is frankly more “brainy” than IB (having spent 4 years in IB myself).
If it’s a CREDIT (hedge) fund that is something banking analysts go to do after a 2 year stint more frequently, namely after restructuring. I know 5-6 who did.
because people in IB are naturally risk averse and are not creative (things you need to be to thrive in HF space). joining the crowd heading over to PE is a better fit
Very true. IB to PE takes average IQ while being in a hedge fund and excelling actually requires 130+ in order to think outside the box and ahead of what analyst expectations are for the mkts
I’ve never met someone not autistic talk about iq
yup, this is correct
Another reason is simply there are more pe spots.
Pe needs an army of monkey to run DD, go through vdrs and write investment memos.
Hfs don't need monkeys. They need people who think independently, have ideas, and can take risks.
Agree w the risk-averse point - you're not likely to lose your job or take huge losses in PE. In HF you will likely lose your job or take a decent loss at some point throughout your career
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