Hedge fund out of undergrad: doable or not?

I go to a decent enough target school. A few top students get offers from hedge funds every year. But because the process is so selective, I don't know if I'll be able to make it in through the traditional route of 3.7+ GPA good ECs challenging coursework and networking. Up until now I've been fairly confident in my academic abilities, but I don't realistically think I'll be able to take a competitive courseload while also meeting the GPA requirements. I have a passion for finance and hedge funds, and unless I join a startup/make my own I'm fairly certain how I want my next few years to pan out. 

Are there alternative methods to make it into a hedge fund without the grades? Should I take a less challenging courseload to artificially boost my GPA? Or should I give up on this goal entirely and go the IB->PE-> HF route instead?  

I'm still a freshman so I have time, but what are my best options here?

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Comments (27)

Mar 25, 2021 - 1:29am

Plenty of kids land at funds like BW, P72, AQR from not-so-great schools, but I have no idea what the GPA distribution is. I'm not sure if there's a cutoff or if that cutoff is school-specific. It is in general really frustrating that students have to trade-off course load difficulty with a GPA for recruiting purposes...but this conflict is real and taking easy classes to get a 3.8+ is a great strategy and I know many who did that successfully.    

Regardless, I would say get to know smart finance/HF-bound juniors/seniors (through social clubs, extracurriculars). They can help you get interviews and give you school-specific advice. 

Mar 25, 2021 - 8:15pm

Yeah, I tried applying to these clubs the first semester but didn't manage to get in. I completely gave up second semester, but I'll try again next year with a more solid plan. 

  • Associate 1 in PE - Other
Mar 26, 2021 - 2:53pm

Yeah man try to stick with it. There are too many grinders out there and too few spots for these firms to take people who aren't going all out

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Mar 25, 2021 - 9:24pm

Honestly the market has been so volatile recently I haven't really been following it. I have noticed some larger trends though. The value of the USD has been steadily declining, pushing a lot of investment into alternative currency like gold and crypto. Despite the mini recession going on and all the layoffs from COVID tech stocks have been going strong and demand for luxury goods hasn't faltered at all. I think this is partially because of the weakening dollar, there's very little incentive to save especially when the government is handing out stimulus checks so often and artificially lowering interest rates. This leads me to believe we're currently in a huge asset bubble that's propped up by the weakening dollar and a criminal lack of saving. People are spending money they can't afford and that never ends well. All it takes to stop this explosive growth is for people's savings to deplete, mass selloffs to cover debt and bills, and then we'll see the criminally low interest rates start spiking hard. I haven't thought this idea out very much so I don't know how to turn it into a trade, but I'm sure some smart people will find a way to make money off of the cashout. 

  • Associate 2 in PE - Other
Mar 26, 2021 - 8:56am

You need to follow the market and have ideas ready to go in order to stand out against all of the other competition that also went to Ivy league schools and have 4.0s. Saying "the market has been so volatile I haven't really been following it" is a sure way to get dinged as how do you think opportunities arise? 

  • Prospect in IB - Gen
Mar 25, 2021 - 9:13pm

You can't memorize answers to get into HFs, unlike IB, so in that sense it's harder, but if you put in the effort on your own it's actually rather easy to network and find opportunities, assuming you have the right experience and pedigree.

Mar 26, 2021 - 6:24am

I would strongly advise against doing HF from undergrad unless  you have a lot of work experience from prior internships.  Being smart is not a substitute for knowledge and these places much prefer a couple of years of product knowledge.  If they are taking people directly without experience, it's probably not that legit of a role.

Mar 26, 2021 - 1:55pm

The most common HF recruitment out of undergrad is into one of the MM programmes. E.g. P72's Academy has been successful for a while- they train undergrads in a Summer internship and spend the 1st year running them through a gauntlet of training before they're put in a pod. The programme is pretty polished and a year in the academy is much more relevant to what an analyst at P72 does vs a couple years in IB/ER. So for smart kids who like public equities and the MM investment style, trying to get into one of these programmes is a no brainer. I know Citadel (GE + Surveyor) and MLP have also started these programmes. If you have a look at the people who are in them, they have all either interned at these funds or interned in IB/ER/HF during their undergrad- so the roles are legit, and they're hard to get.

Mar 26, 2021 - 2:58pm

Yes, they take kids who are ultra prepared.  I was one of those kids a very long time ago.  Being incredibly smart just isn't enough - you need to be really prepared for me to recommend starting on the buyside.  This means obsessive personal interest for years and a lot more experience than a summer internship or two to really be competitive and useful - on top of great grades in a legit major at top 10 school.

  • Associate 1 in IB-M&A
Mar 26, 2021 - 12:03pm

Just my personal thoughts. HF out of undergrad is a no brainer if and only if it's a large AUM, established fund (>$10b) and you are sure you want to go down the HF route. Biggest drawback clearly is you become pigeonholed to HFs from the get go which is why I recommend being sure you want to go down that path. The obvious comparison is IB > PE > HF. I think starting from undergrad is effectively just accelerating you to that last stage and I think most people who have gone down that classic path do end up staying in HF for the long haul anyway. Everyone gets 'pigeonholed' at some point. IB > PE > HF just delays this by giving you time to explore what might fit you best. To most people that's important because honestly who knows what you like when you're in college. But to some who are clear about it, might as well jump in with two feet. I personally would take such an opportunity if it came to me as I do believe there is value in learning to think like an investor or just being familiar with stocks which can put you ahead of some of your peers (3-4 years is a long time in the HF world). In reality though - large AUM HF seats right out of undergrad are just so rare (if they even exist) and so IB is the best bet out of undergrad. Definitely would not want to go to a small HF out of undergrad versus BB IB for example. 

Mar 26, 2021 - 11:10pm

Yeah this makes a lot of sense. But what exactly causes this pigeonholing? It's very difficult to get into a HF out of undergrad, so why would it be hard to pivot into different roles later on? Is it because of how specialized the HF skillset is? 

Mar 27, 2021 - 12:08am

Read, read, read and read some more. Listen to podcasts like "masters in business" everyone always says read.

Also your response above was pretty brutal wont lie (not being mean). Your username is poker related so guessing you into it. So have some risk skills.

Think of your pitch as "a hand of poker" what cards you have, whats out there what scenarios you look at (based on river etc..). Start to be much more direct in the way you see the market and how you could model it out.

Mar 27, 2021 - 10:16am

I've tried poker, I've tried investing, and poker is by far the easier of the two. In poker there's a defined winning strategy. If you stick to it, you will make money. If you deviate from it, you can make even more money. Your enemies are mainly dumb gamblers and low level thinkers. 

The stock market is a different beast. Everyone is out there grinding trying to squeeze out an edge, and you need to spend days to weeks thinking through an idea and there's no objective way to tell if your strategy is winning or you're just plain lucky. 

Mar 27, 2021 - 8:03am

It's pretty funny, because the way things work is once you get a buyside job out of undergrad, you can just immediately "give up" after all that hard work. You don't need to know anything about markets and there's definitely not any more work to do. What actually happens is everyone just addresses you as a "baller" and tells you how awesome and prestigious you are everyday of your life, and pay you more than you can ever dream of. You win.

Mar 27, 2021 - 10:21am

I know in my post I come across as naive and uninformed (which I am) but I'm still a freshman and have a long ways to go. I want to be in an environment where you're rewarded based on skill and not schmoozing. I think I'm intelligent enough to figure things out, even if I don't know them at the moment. 

Maybe I don't want a buyside gig and it's different from what I imagine. Worst case scenario I'm overprepared to go into IB, and can probably even pivot into tech or startups since I'm planning on taking quantitative courses. I don't know what I will want in the future, but I know what I want now and I'm taking steps to go there. 

Mar 27, 2021 - 11:23am

Yes you have a lot of time as a freshman, but I think if you're going to go any of those routes you're much better off committing 100% to what you are doing. The sooner you can adjust your attitude to what the reality will be like the better. People who are still 'figuring it out' by the time they show up on the job usually end up in bschool.

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