Hey guys,
I'm curious about the possible paths taken to get into a Hedge Fund. I understand that some of the common paths include IBD>HF or ER>HF or sales>HF. Depending on how my applications go, I may initially need to start out in accounting before making the move to IBD/ER (I understand the ACA is valued highly and can help with breaking in to BBs).
But here's the thing. I'm not sure if I actually want to do IBD, as my interests lie in the markets. You may then suggest ER, but I understand that with ER you will specialise in one sector, which doesn't appeal to me. Also, i may not want to work in equities(however I don't know for sure yet).
So my question is this: are there other paths I could take eg Accountant>Asset management at BB>HF? or is IBD/ER the only realistic way.
Thanks in advance.
Dude, I'm going to put this in the clearest terms possible.
You are in no position to whine about how you don't want to work in IBD or might not enjoy ER. Get offers in as many front office roles as possible first and then make your choice from there.
Odds are when the time comes for you to pick a FO finance gig you won't have an offer from every division in the bank and will have to take whatever is given to you and be happy with it,
Also, in IBD you specialize in a specific sector/function not only in ER... generalist teams are uncommon and are typically only available in very small boutiques (5-10 man operations.)
To answer your last question: AM at a BB (assuming you mean mutual fund/alternative AM fund management here) will be looking for similar backgrounds that HFs are looking for, its unlikely they'll take you right out of accounting. They will favor guys with ER and IB backgrounds.
As it stands the ideal path for you would be
Accounting -> ER/IB -> HF (networking would be key)
OR
Accounting -> B School -> ER/IB -> HF
Good luck on your future prospects.
Hey Futures Trader Man thanks for the detailed response.
Good point, I guess that was a case of me putting the cart before the horse. I don't underestimate how difficult it is to obtain an offer for the FO.
Ah I see. Thank you very much for the info it has been noted!
Out of curiosity do you know how comp compares for traditional AM and HF?
Yeah, comp in AM will be a lot less volatile than what you'll find at a HF. At a HF pay can vary widely.
i.e. a buyside Associate in AM at a BB with a couple of years experience on the sell-side prior to switching would make around 150k base + 100k bonus = 250k all in (comparable to an Associate in IB/S&T or Senior Associate in ER)
On the HF side it will range. But a good idea would be something like this.
Base 150k bonus 0 - 300k.
(Yes there are massive ranges some have a base of 200k some are lower but more bonus etc -- just giving a guideline).
The guideline shows that a lot of it is performance based -- now if your group/fund/analyst/PM at the HF does amazing? Well congrats buddy, you're in the $400K+ range all in.
So, generally at the associate level the risk reward favors being in the HF industry because comparing 200-250k vs. 150-400k is of course a no brainer.
It really comes down to how risk averse you are but most would forego the guaranteed additional 50k in order for the massive upside available at HF.
Would it be appropriate to assume that an Analyst in AM at a BB could make a switch to a HF so long as its within the same skill strategy/asset class? I would assume that the roles would be pretty similar?
It's possible, but why would you do that?
If you work in AM at a BB it would've taken a lot to get there and many folks aren't doing it with the desire to go to a HF afterwards. Probably a better idea to stick it out and work towards PM at that point.
If you want to go to a HF it doesn't make sense to go to AM at a BB first, you should just go directly to HF. By the time you're in AM at a BB you already have the skill set to get into a HF in the first place without needing to work as an AM associate.
Ah thanks for clearing that up. Assuming you go straight to BB AM from ug, what do bonus numbers look like. And is associate comp at a BlackRock/PIMCO/fido going to be more than at a BB AM or relatively the same?
Glad to help.
Bonus numbers for entry level at BB AM (again, mutual fund mgmt/alternative fund mgmt) will be similar to IBD and S&T @ 85k base + 25-85k bonus depending on shop, group performance, etc.
No idea about pure play AM shops straight out of undergrad i.e. the PIMCOs of the world. Most guys I know that got into these shops got in after working in ER for 2-5 years and they're extremely competitive with smaller teams than you'd think. But I'd wager that they pay a bit lower than a BB because they derive much more value from their experienced hires than they do from someone fresh out of undergrad who has to be trained and has no modeling/market/industry experience etc.
accidentally didn't quote you
"I want to be a doctor, how do I do it without going to med school?"
Wow, I didn't realise that going the IBD/ER route was the only way people did it. I thought maybe for example people went in from consulting or perhaps other avenues.
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