Advice needed pls: offer from Fund of Hedge Funds (FoHF) vs Insurance's Multi-Asset Investment
Dear all
I got offers from two places: 1) as a multi-asset investment manager for an FoF ($~2B) and 2) as an investment manager for an insurer (~$20B).
- For 1) FoF, I will be primarily doing manager selection, portfolio construction, and to a lesser extent asset allocation/style or factor selection.
- For 2) Insurer, I will be primarily doing asset allocation, portfolio construction, and quite a bit of portfolio implementation.
I have 5 years of experience now (3 years in long-only multi-asset, 2 years in family office). I understand these two options are quite different and will likely determine my path down the road.
From my gut feeling:
- For 1) FoF: The upside is that I can expand my network and meet more people. The downside is that if HF as an asset class is not performing, there will be more outflows in the future. The exit path is going to other alternative funds/bigger platforms.
- For 2) Insurer: The upside is that I can pick up the skills in managing a big portfolio again. The downside is that if I pick the insurer path, it is unlikely I will be able to jump back to asset management as insurers manage its investment vs liability, instead of returns. The exit path is going to other insurers/work my way up.
I am quite lost at the moment and struggling to decide...would be most grateful if you could share some advice, please.
Thank you in advance for your time.
Hi mundi, check out these links:
More suggestions...
Fingers crossed that one of those helps you.
What did you do at the family office/LO and what is your goal?
- Would strongly vote against FOF if you have any inkling of trying to do primary investing in the future. FOF used to be really sexy 15 years+ ago, but now folks are wondering with HF performance as you point out why pay another layer of fees? It was always tough to make the transition (the "network" aspect always seemed overhyped). Exceptions could be if BAAM (sophisticated) but doesn't seem to be the case given AUM referenced or if you have modeling experience from family office/LO.
- There could be some elements of FOF in the insurance role if you are evaluating/allocating to internal teams and could be even more the case if allocating externally, which could be the case with only $20 bn AUM. That said it should be closer to primary investing as probably still have to think about different aspects of managing a fixed income portfolio. Plus if there are internal primary investment teams this would be an option. It can be a slog, but you are not limited to insurers. Just to be explicit a credit/structured PM/analyst at an insurer will have a better shot at marquee investing roles than a PM/analyst at a FOF all else equal (not saying either is a slam dunk).
If your goal is to be an allocator ignore all the aforementioned and probably closer to it in the FOF role. Again, your background and goals matter a lot here
What's your thought on PE FoF, especially the large players in the industry such as Alpinvest, Harbourvest, Hamilton Lane etc?
I'd defer to others who are much closer to the space, but my impression is significantly "less bad" given 1.) the potential co-invest opportunities, and 2.) potential secondaries exposure (where presumably you are doing some valuation work on the underlying). However, this is far beyond my areas of expertise to will leave it there.
Thank you very much for your help.
I am doing global L/S equity (equity basket/thematic equity primarily) at the family office and was doing multi-asset research (equity mostly) and portfolio work with the LO.
My goal is to be a Multi-Asset PM/CIO one day. I am leaning towards the insurer role now, but I have a very heavy equity background. Do you think this will be a disadvantage to me in the future considering insurance investing circles around fixed income primarily?
Definitely do not take the FOF role given your goals and background. As an aside I see why you are attractive to them. I always believed a good FOF should be made up of 3 types: operational due diligence gurus (probably law background), data analysts for decomposing returns/risk, and ex analysts/traders/PMs who actually know what it is like to run money. Unfortunately, not the case at most places but you would check a couple boxes for them.
Anyway yes insurers are FI heavy and i would caution stockpickers to stay away, but given your more "macro equity" tilt I think you could carve a niche there and pick up the FI side quickly, so would be very well rounded. Potentially selling yourself a bit short but unsure on motivation for leaving and ability to get other options- why not try and join a macro fund assuming you have the programming skills or try hand at sellside as a desk strat (i know these roles dont grow on trees)
The FOF would be very similar to what your doing at your family office, no? I work at an endowment / foundation, doing PE / hedge FOF type work. If you did hedge FOF, endowment or foundation would be an option.
Curious.. what does comp look like at your family office and at the two offers you have?
I am doing direct equity investment (and a little bit of short duration credit for enhanced cash purpose) at the moment as my family office likes to "do-it-themselves" instead of allocating to others. So I am familiar with some of the underlying strategies in the absolute return world.
What do you think about Hedge FOF in general? I have a few connections that told me this business is getting harder, as evidenced by the decreasing AUM and due to their personal experiences of witnessing Hedge FOF allocation/business being shut down within their organizations. My view is that a lot of bigger guys/endowments prefer to do this in-house and that's the reason why AUM is decreasing for Hedge FOF. Yet, for those that dislike Hedge FOF allocation, I have seen from news that some pensions scraped the entire allocation. Btw, if I choose to do Hedge FOF, I will be focusing on EM/China as part of the wider FOF program (PE/HF). Not sure if this will change one's opinions on this matter.
Could you maybe elaborate a bit on your last point? Do you think there are a lot of opportunities in the FoF space in EM/China
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