I have a summer analyst offer at a hedge fund that manages $1B+ and has back office). This seems like quite high employees/AUM and I'm wondering how comparable to other firms this. Is this a positive fact or for this early in your career is it better to start at a firm with more people and a bigger name? Also, if I were to receive a return offer does it seem likely that analyst compensation would reflect this capital concentration?
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bump..
Do you have any other SA offers?
What's the strategy of the fund? Do you like this strategy? Is the team balanced in terms of seniority? How many years of track record does the fund have?
Comp is quite variable and difficult to predict with these kind of funds.
Less people is positive I think. You get very good exposure to the key decision makers, you're able to understand the investment process, and gives the opportunity to get involved with projects. Certainly a good amount of AUM vs employees.
agree - more exposure to decision making is better than less
The ability to raise that kind of cash for a fund with such a small team is usually a good sign. Indicates confidence from institutional/UHNW investors.
Pretty sure AUM/employees is high, not the inverse. Surprised you got the offer.
Every time I get a recruiting email for a HF role, the recruiter will highlight if the firm has a high AUM / head. It generally lends itself to more time with the PM / senior analysts, more responsibility, greater ability to get ideas into the book, and maybe even more flexibility in terms of mandate / investable universe. ~$200mm / head is not crazy high, regardless
I would also note that a HF is likely a viable, going concern at $1bn+ AUM (as a rule of thumb). Or at the very least, I wouldn't think you are taking a lot of career risk in joining such an organization.
The flip side is, while people in the fund's space might be familiar with them (particularly if their track record is good), they may not have the visibility of a larger fund, which may be important to you if you are considering joining them right out of school.
Sounds like a great opportunity - I would jump on it (without knowing your other opportunities)
HFs w low headcount and high AUM are a good sign....usually it means they could take on more AUM but choose not to.
Some of the best performing HF's out there fall into this category...where AUM is enough, but not too much where they need additional resources. Sometimes people keep lower AUM so they can have full control over their strategy...there are funds out there that have a "sticky" 1 bil....and investors don't care about whether or not they are beating the market on a weekly basis...these are the best funds to work for imo.
Think about it this way....even if the fund is running 1/10 v. 2/20....each employee is making a very good living.
Plus small shops you'll learn way more.
I've seen like 6 investment and 6 back office people in a Fund managing $200 million.
What's the strategy of the fund? I'm going to guess value...
I'd take it. That is a phenomenal AUM/employee ratio.
Does anybody have thoughts on a $1b long-only fund that is managed by one PM and one analyst which operates within a $5-$10b AUM firm. Does two investment professionals for $1b seem typical or is that below average even for a long only fund?
For long only, and within a larger firm (so it can leverage infrastructure) that seems about the minimum team size you would expect. Depending on the names (mid/large cap), they may need another analyst if they take on additional capital as it would be harder to keep exposures consistent in smaller cap names with more and more capital
It is more indicative of what kind of book the PM runs. I would guess fairly concentrated and low turnover, which results in less need for a large team. It also means that you will spend more time doing fundamental work, as opposed to being much more trading oriented like at, say, Citadel. There are pros and cons to both. At your level (entry), the $aum/person is not going to be a huge driver of your comp because your comp will be fairly standard.
Team size varies more by strategy than AUM in most cases as it depends on how scalable the investment process is. As said above if it is a low turnover portfolio or has very specific exposures there is less of a need for a larger team. Once you know how the AUM relates to the startegy you can see if it is a small or large team. I would say a small - but not too small (start-up) - HF is a good environment for an SA. Also, even if AUM is small for the strategy that is still a lot of capital so it will probably be a relatively prestigious name in the local area.
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