Asset Management exit options vs Investment Banking
From where I am sitting (admittedly in a very inexperienced chair) IBD exit options seem quite clear: PE and/or Hedge Funds. The latter option, especially, looks like a shift to the buy-side. Given that AM pros are already on the buy-side, are AM exit options similar? and if so, would an asset manager, particularly one who went down the CFA route, find it easier to secure a role in a hedge fund or PE fund than, say, an investment banker?
Asset Management exit options are primarily just more asset management... You don't hear of AM guys moving to hedge funds or PE just because the styles are so incredibly different (HF could be less of a stretch but generally they'll prefer young pedigreed bankers or guys on good S&T desks). The CFA is neat (I am a charterholder myself) but it's only valuable in AM.
Based on what I understand, despite hedge funds being very different in rules and strategies to 'normal' mutual funds, the general work is quite similar, or at least more similar than in IB. Is there a reason why they prefer bankers as opposed to asset managers?
I think it's a mindset and culture thing - a lot of hedge funds are filled with ex-bankers so they hire bankers. Also the pace and demands of an HF is similar to banking whereas AM is pretty glacial and more laid back, generally. I'm speaking in broad generalizations of course.
Thanks for the insight.
Interesting to know that HF is similarly strenuous and fast-paced as banking. Theoretically at least, it should be possible for someone in AM (with a CFA) to go into HF so long as they can network effectively and prove that they can graft sufficiently. Right?
AM exit is AM. Be absolutely sure this is what you want, or go IBD and decide later when you have a better idea.
I have internships in fund management but none in IBD. As a first-year student in a 2-year MSc at a London-based 'target', I am seriously considering applying for SA programmes in IBD given how nobody seems to think highly of AM exit options. Worried about my chances but that's another matter. Regarding exit options, I had always assumed that passing all 3 CFA exams would place you in a better position for HF than a few years in IBD...given how HF roles/functions seem more akin to AM than IBD
It's not about having a high/low opinion of exit options. It's about knowing what you want. If you know there's nothing in the world you'd rather do than AM, then go AM. The fact is, very few people know at age 20-22 that AM is what they want to do without question. This is compounded by the fact that AM and equity HFs right now are struggling as a whole with fee pressure (you almost never hear of HF's charging 2 and 20 anymore or AM's charging 100 bps; at my AM we charge about 50-75 bps depending on the client, and I know this is a general trend across the industry). From the shift from active to passive, which is screwing a lot of active (especially closet indexers), AM positions are shrinking relatively rapidly, and the growing impact of AI will cull the industry again. AM's best days are behind us.
That's why it's so critical to know this is what you want to do. For a 22 year old, this is rarely feasible. HF's have other strategies than just public equity & debt, so there's also the private side where you see funds like Oaktree or Elliott investing in, but that's also a very saturated market. This is why IBD is a great option for someone coming out of college, you get two years of training that can help you pursue whatever you want (PE, HF, Corp Dev etc.), which you can decide later, now with actual experience and modeling ability.
Also, CFA is rarely important for HFs. It's more important for AM.
Aut ea est cupiditate debitis. Quod consequatur illo quia et. Quod est quo voluptatum beatae consequatur. Sit harum vero laudantium harum ratione explicabo. Sapiente placeat dolore cum nulla.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...