Given that MF PE associates seem to be at 350-400, are those that leave for HF after their stint taking payocuts to do so? What should a 2+2 candidate expect at top SM's (Viking, lone pine, tiger) as a freshly minted analyst?
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I’m at a smaller SM $5bn and am making ~$400k my first year after leaving PE. So I’d imagine the Lone Pine’s of the world are paying more like $500k
Is there any particular reason for the lack of transparency in hf comp? Why do so many mf pe associates leave. Is it just comp, trajectory, or the nature of the work?
You can potentially make a killing in HF. Typically does not happen in first year, so MFPE people aren’t switching for an immediate increase in comp. Comp in HF is tied much more closely to fund performance and individual contribution.
No hedge fund you would go to from a megafund would be paying any less than $500-600k. You don’t take a pay cut leaving from MF PE going to a hedge fund unless: (1) you made an unforced error; (2) you made a calculated move to join a start-up fund where you’re playing for outsized upside. Most situations in #2 wouldn’t hire someone uninitiated and u proven in the public markets. So if you find yourself going the #2 path straight from MF PE, you’re probably actually going the first route but don’t know if yet.
So does it ever make sense to stay in PE if you are at a MF. Assuming your ambivalent to the work wouldn't you see higher upside more quickly at a HF?
This may get a bunch of monkey shit, but PE is an industry where you can get rich if you (a) have the pedigree to get in or (b) the grit to get in without the pedigree and then you really grind and toil, have few unforced errors, get a little lucky, and are charming enough to play the political game and you’ll make your way to partner. It’s not that hard to do PE at a megafund if you can somehow check the above boxes - no easy feat. But it’s all about effort.
What’s hard is: (1) gaining admission in the first place; and (2) the arms race of effort and life sacrifice required to navigate multiple promotion rungs to get to the top when the wealth fly wheel really gets going.
HF you really need to love it. It rough and tumble getting slapped around by the whims of the market and the shorter duration quarterly redeemable capital means you can’t afford to wait for everyone else to figure out what you (think) you know. There’s days it feels like more a video game than investing. It’s also less institutional — so the processes and systems are just not there. To a large degree it’s a bunch of guys running around trying to buy bootleg cigarettes and sell them outside of the subway to make a quick buck - but at scale. It’s less ‘fair’. Doesn’t matter how right you were mathematically or hard you worked, if you lost money because your positions became WSB meme stocks, your P&L is all that matters and you’re history. There’s one 1x non-recurring add-backs in hedge fund PM P&Ls. The business is more about that hustle and status as a ‘money maker’ so there’s lower pedigree and charm barriers. It’s why you see along of seemingly greasy hustlers or the aspe set that have a hard time with the ppl aspect of more institutionalized environments.
That should answer your question. You don’t go to a HF bc you don’t want to be in PE.
You go to a HF because you want to be at a HF. Your question is sort of like saying “should I fuck dudes because I don’t see a future with this girl I’m dating?”
It’s harder to get into MF PE. It’s harder to get MF PE rich at a HF. So it’s a bit of a wash. Do what you think you’ll enjoy. It’s really hard for different reasons no matter where you go, so if you don’t enjoy it, you don’t stand a chance of having any longevity in the industry.
You have to be good at your job if u want to make it at a HF
how old are you? how much money do you make?
Mid to late 20s
Comp: $300-500K TC depending on performance (decent to good year)
Took a sizable cut to go to a tier 1 HF (not from PE though). Maintained a front office position. Have not regretted it whatsoever.
Its hard to in the moment to see the compensation cut and not start to doubt the move. But, try to focus on career aspirations, a place to grow, and benefits/flexibility. 10 years down the road this is the stuff that ends up being the most important (do I have great low cost insurance for the family & other benefits, ability to invest in funds, flexible hours, actual days off, great 401k matching, etc.). Remember too being bonus heavy means you're day to day spending shouldn't change that much (hopefully, if you're budgeting).
It is very important to realize though there is still significant risk & difficulty. Going to smaller ones absolutely can be more prone to closures (as can the larger ones) with market vol.
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