Advice needed: Offers from Top Performing HF in Hong Kong vs Reputable AM (Fido/Capital/Wellington)

Dear WSO,

I currently have two offers and I would like some advice on which one I should pick as I've heard logical arguments for both sides. Goal is to eventually work in a HF but willing to stay in AM if pay is good enough for a very comfortable lifestyle.

Background: Completed internships at a quant hedge fund ($500m AUM), fundamental L/S equity fund ($5Bn AUM), and long-only asset manager ($500Bn total AUM but my team had $7Bn). Graduated with 3.8 GPA in undergrad and 3.5 GPA in MSc Finance from one of the best business schools in Europe but I have zero work experience.

Option 1. Hedge fund: One of the best performing fundamental value funds in HK (~15% CAGR over the past 12 years) with USD$3Bn in AUM. Investment team is pretty small (<15 with 1 fund manager and 2 PMs) and have been promised that I will be mentored by the fund manager himself, which I think is a huge plus. Will be given analyst responsibilities (leading meetings with management, country visits, channel checks etc) almost immediately upon joining. Famous in HK but not so much outside the country.

Downside is that my starting salary will be USD40k with guaranteed bonus of 8k but could go up to 40k (essentially 100%) based on my recommendations. Base will rise every 6 months but not linearly and I feel this is way below the market. Have been promised share options after 3 years but unsure of the specifics. PMs are making high 7 to low 8 figures but they've been there for almost a decade while fund manager is probably a billionaire or pretty damn close. Entire fund seems pretty dependent on the fund manager and I don't think they'll survive if he retires (although he says he'll work for another 10 years minimum).

Option 2. Asset manager: Structured training program with an indisputable brand name from top 5 active manager (Fidelity/Capital/Wellington) in equity research. Pros are that it definitely gives me better exit opps than the HF role and much higher base of 75-85k plus 15-25k bonus. Salary progression is also more predictable, making it easier to budget for the future. I'll probably get a lot more exposure due to the firm's size, allowing me to attend conferences, sell-side events and my CFA will be sponsored.

Main downside is that I won't be able to choose my team and most of these managers have many underperforming funds. Thus I'm afraid I may get posted to one of them and waste my formative years in mediocracy. Development will definitely be slower with the lower level of responsibility. Might not get much face time with senior analysts or PMs which is a bummer as I feel it's one of the most efficient ways of learning investing.

Sorry for the long post, but any help is much appreciated!

Comments (12)

 
9/26/17

Good predicament to be in. Why is the pay so low at the the hedge fund? That seems abnormal. Working at the hedge fund seems like the better opportunity. You actually want to work in hedge funds. The mentor-ship and the unique life experience of working in HK as financier seems too interesting to pass up. If you could secure your worth in pay then option 1.

"The only thing I know is that I know nothing, and i am no quite sure that i know that." Socrates

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9/29/17

According to the manager, in his experience, most analysts tend to have little contribution for the first few years and have to be trained in the fund's investment philosophy. Once the analyst can reliably demonstrate his worth, the comp will increase as well.

The problem is this sounds very subjective and there isn't any traditional guidelines I can refer to regarding pay progression. On the other hand, the manager has quite a good reputation, so I doubt that he'll go back on his word.

I'd also like to point out that my AM offer is in HK as well, so it would also give me the experience of working in HK as a financier. Would that change your recommendation?

 
9/26/17

Experience-wise, definitely the HF but try to negotiate for more pay.

 
9/29/17

For the reasons stated above plus I cold-emailed him for an interview, I feel that the HF holds all the bargaining power. Additionally, he said all of his analysts started with this pay and this is to weed out applicants who are only in it for the money.

I'm not sure how I should approach him to negotiate for more pay.

 
9/28/17

Personally, I would lean towards the position in the established asset manager.

Seeing as you haven't had any work experience, it would be extremely beneficial for your development to be on a structured training program. Once you got a good training, you could always jump to a L/S HF with such a big brand on your CV.

 
9/29/17

"....have been promised that I will be mentored by the fund manager himself"
Every fund says this, so don't put too much weight on it. Some PMs care about teaching juniors, others don't. But no one is gonna tell a prospective hire that all you're gonna do is grunt work.

That said, if you want a career in HF, take the HF job. It's better CV-wise because a substantial number of HF people are very biased against long-only backgrounds.

Low base salaries are kinda common in HK but that's too low. Negotiate higher pay - tell them what you think 'market' pay is, and ask for that. They can afford it given they're a well-established fund.

 
9/29/17

Thanks for the advice. Yea, I'll definitely take the mentoring bit with a pinch of salt, but he did seem more genuine than most fund managers that I've met.

As I mentioned to other comments, I don't think I have that much bargaining power, especially since I was the one that reached out and cold-emailed him for a meeting. If it was a job advert, I would feel more comfortable asking for a higher pay. During our meeting, he said its below market average but it will get better quickly if I can show my worth to the fund.

Would you still take the job if the salary is non-negotiable?

 
10/1/17

I just don't like it because if you accept that salary, they'll think they can underpay you again in the future. It sets a bad tone.

I would suggest being upfront - tell them you really want to join, you can see yourself being there for a long time, but the fact is HK is very expensive. Some of these guys can be really out of touch about what 'market' salary is for juniors so you may actually need to tell them $40k is like 50% of market.

Feel free to DM me if you want to chat.

 
10/1/17
undecided_investor:

Thanks for the advice. Yea, I'll definitely take the mentoring bit with a pinch of salt, but he did seem more genuine than most fund managers that I've met.

As I mentioned to other comments, I don't think I have that much bargaining power, especially since I was the one that reached out and cold-emailed him for a meeting. If it was a job advert, I would feel more comfortable asking for a higher pay. During our meeting, he said its below market average but it will get better quickly if I can show my worth to the fund.

Would you still take the job if the salary is non-negotiable?

Why do you think you have no bargaining power? You have another offer that you seem at least somewhat willing to take over this one if needed. That counts for something.

 
9/29/17

you are being way, way underpaid for HK

 
9/30/17

Is the fund Janchor?

If it's Janchor definitely choose them.

 
10/1/17

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