Exits to HFs: Sales vs Trading in S&T?
Hi everyone, title says it all.
I’m considering different desk rotations within S&T and trying to understand how HF exits differ between Sales and Trading roles. I think my personality leans more toward sales, but I’m also curious about trading and plan to rotate through at least one trading seat.
The part I’m struggling with is the following. Why does it seem like it’s more common/easier for traders to move to HFs, even when many seats aren’t discretionary almost at all (especially in more flow/market-making roles)? In my mind, strong salespeople who consistently generate good trade ideas and can articulate risk/reward should also be competitive for investing seats (similar argument for research).
What am I missing in that reasoning? Is it mostly about:
- track record / P&L attribution,
- risk management reps,
- the type of product (liquid vs less liquid),
- or simply how HFs screen candidates?
Any advice or personal experience would be appreciated, especially on which desks/products tend to keep the buyside door most open (even if I end up preferring sales long-term).
Thanks!
Bump
Sales does the best in HF exits. Traders don’t have any relevant skills for HF.
What a retarded
Congrats on Sales at UBS!
Trading is more common but lots of Sales people do it aswell, usually after 4-5yrs + though, not 2 like banking, although this sometimes happens. Imo structuring is the rarest role to move over.
Which desk depends on what you want to do - equities I feel is a bit less common as HFs usually take people from IB/PE for those more junior seats, thus it seems equities S&T people moving to HFs is usually at MD level.
Credit is credit, not my area so not sure. For macro, usually rates>FX because it's easier for a rates trader to get their own PnL attribution as you can get coverage of one part of the yield curve e.g. 5-15y periphery if you do EUR swaps etc.
General rule of thumb is you want to be at a top seat (hard from e.g. SMBC) because HFs generally do most business with top banks, and you want to be in the top 10% of PnL in your sector (keep in mind that risk-adjusted PnL is the real metric, not just PnL - this is also how bonuses are calculated for traders at banks). Most HFs also seem to want coding skills.
This is the right answer
Do you think structuring is the rarest because there are fewer structurers or because the skillset is the least transferable to HF?
Specially curious regarding exotic structuring roles given they can be highly technical not the ‘sales-structurers’ that deal with less complex products.
Honestly not sure and I'd rather say that than risk giving wrong advice so take the below with alot of salt. Personally I think it depends on micro/macro products:
Super in depth knowledge of the mechanics of complex rates/fx products just doesn't matter so much, and I would say isn't super valued - it just isn't needed to trade these things and to know what moves the price.
For micro products, this is different - that's why I said L/S equities/credit seats at hedge funds tend to go to IB/PE people because they have a granular understanding of the companies they're trading, which generic equity traders etc. don't have. So if you do complex equity derivatives structuring, this probably is quite useful and better sets you up for a HF move than a cash/spot equities trader, because you have that granular understanding that they don't.
So I would say rates structuring and stuff, personally I avoided because exits don't seem great nor is the skillset desirable. But exotic equities structuring probably is better, you just have to beat our the 2 years IB - 3 years PE associate profile for those seats which is quite hard. Also people doing exotics anyway are usually very well paid so have less reason to move. I'd probably rather do exotic equity derivatives trading instead.
what about for commodities?
I would say largely similar advice - I don't see a ton of commodities moves but there just aren't many of them about. Commodity derivatives/options/volatility trading is probably best rather than spot.
I suppose one difference is that lots of hedge funds recruit commodities traders from big physical trading places like Trafigura/Castleton/Vitol etc., especially for their offices in Houston/Dallas - see Bluecrest, Balyasny who (I think) have made hires in this space
What kind of coding skills do HFs look for, and how does it differ from the coding skills that help for S&T jobs?
Similar skillset, my desk only really uses Python and I guess hedge funds might like C/C++ which is quite rare for people to know. But altogether similar, date science/regression/ML, the usual.
I always recommend Kaggle - if you can do well on there then you basically have what they want (probably).
where are you going?
Sales dont usually end up in PM seats. I put usually since I'm sure there are examples, but I've spent awhile in the industry and cannot think of a single one on top of my head that made the move. The most common moves are to BD. You can still do very well buy side however.
The biggest hurdle is that sales don't own the risk.
Dan Loeb who was a Citi HY sales guy before founding third point :).
But you are correct, it tends to not happen for sales people to move over to PM seats. In credit-land have seen some sales-people join funds as traders (more execution / cap markets orirented) but its much cleaner to do as a trader.
I’d imagine modeling might be an issue for a salesperson of trader trying to make it to a hedge fund given lack of reps. What’s the advantage of hiring a sales or trading person over IB/PE/research? It is Understanding flows and positioning? Product speciality? Or what else?
There’s more to hedge funds than just L-S equities lol. E.g., how exactly would an ib analyst have an advantage over an FX vol trader at a macro hf
Please stop talking shits about things you dont know. Student. 🙏
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