Hi all,
I recently had my final interview with the MD for an Investment Analyst role at small/unknown long-only AM firm which I thought went well (to be honest...seems like most AM shops here in Australia [and particularly Melbourne] are small boutiques anyway). It's a small shop with probably 3-4 investment guys, been around for 20+ years and mainly does SMAs (discretionary portfolios) for HNW clients. If I had to guess, AUM is under AUD$500m, probably somewhere in the $200m+ range.
My background is final year B.Commerce from target, with decent grades (below average extracurriculars) and no prior internships, so considering my CV the fact that this firm is willing to look at me is something that I'm extremely lucky to have. This would be my first full-time job out of university.
I recently came across BlackHat's post from 2014 titled "AM Vs HF: The Business Of Our Business". I'm mindful of the fact that this is probably more US centric, but below is his response to being asked on his thoughts of working at a small/unknown fund for someone starting out:
Small/unknown funds I know very little about. I would imagine these places have single strategy, small AUMs and not a lot of exposure to management. Probably a ton of responsibility though, but very hard for recruiting purposes to move on when nobody knows your firm and you're investing in obscure small caps or something.
After speaking to the MD today, I found out that the fund mainly focuses on their small/micro caps strategy as their edge (something I'm interested in too) and was told that it was actually the top performing fund in the country over the past year for that strategy (and has also performed well against benchmark for the past ~5 years so a bit of track record there). PM has prior BB sellside ER experience (top-rated analyst) and has been in the industry for a long time, so I'm sure there's lots to learn from him. However, the response received from BH makes me question the decision of starting out in a no-name fund (would probably still take the offer if given though!). Would like to eventually work at a HF/top AM, so logic tells me the obvious route would be: no-name AM (this role) -> better AM -> better AM-> etc. and then eventually HF/top AM.
Obviously, there's not straightforward answer to this, but would appreciate any thoughts on a graduate starting out at a no-name fund. Would also love to hear from those who may know what kind of comp to expect going in, cheers!
I would take the traditional path if you had other offers but if this is your only option it sounds like it fits you well. Did you discuss pay? I am wondering why they would hire a no-experience graduate rather than someone with two years experience in ER or IBD etc unless they were trying to hire someone for not much money.
By traditional path, do you mean structured recruiting for top AMs or IB? Potentially might have an internship opportunity with a boutique/no-name corporate advisory firm (~6 guys, 1+ yr firm, mostly ECM deals on the lower end but was told they have strong deal flow for 2021), but this offer won't be full-time and I'm not sure if I would fit (more in terms for IB)/recruit well for BB IB or ER after that. Think my interests ultimately lie with equities.
Haven't discussed pay yet with the AM, but have an inkling that its around the AUD$55-65k range (including super - similar to 401k for Americans - so take home pay would be around $50-60k less tax). I would imagine that this is probably on the lower end of the Street comp wise...so that may answer your question.
Also, I think recruiting may be less standardised here than in US so a bit of leeway in terms of hiring a fresh graduate. They hired another guy who had a similar profile to me (fresh grad) a year or two ago so I suppose they're more after someone with demonstrable passion/interest in investing and are willing to train them up.
How do you think the comp stacks up?
Yeah by traditional path i meant IB, ER, trading -> HF, but it seems like that probably isn't an option at this point so i think if you're offered this you should take it. I do think the comp seems low (i started in Syd so im familiar with a lot of the starting salaries) but experience trumps all. It seems like you like what this company does and if you're good at what you do i have no doubt your comp will rise where you are or you can leverage the experience you get here to go somewhere else. The smaller team size means you'll probably get a lot of responsibility quickly if you show your talent.
I read your other response so i'll come back on that as well... even if you're offered this role for post graduation, still try to recruit for the summer vacation jobs at all the investment banks (just say on your application you're going to do an honours year), its free optionality and if you're offered one of these as well then you can have a think about that.
are you graduating at the end of this year or are you going to grad school
- will you have opportunity to do another internship for summer?
Still undergrad, no plans to do a post grad for now (not opposed to CFA if needed). Sticky spot, without giving away too much COVID had cancelled my study abroad. So final year, but option to extend if I really wanted (may look bad as I’m already a super senior as it is, so an extra year may look a bit fishy though COVID excuse could work).
But to be honest, I’ve never had any luck with more structured, bigger company recruitment (BB, EB or Big 4/mid tier accounting firms even) so I really just feel like securing a good job, doing something I know I like right now which is equity analysis and which also gives me some optionality to re-evaluate ~1.5-2 yrs from now. At that stage, I think I would re-evaluate to see whether I want a name brand on my CV (or not!) or if equities really interests me - then go do something else!
Cheers.
There are a lot of firms floating around in Syd/Melb that meet the criteria you describe. Quality tends to range from pretty good to garbage and honestly, it's pretty hard to pick one from the other when interviewing. At the end of the day, if you want a career in equity research, buy-side ER experience beats pretty much anything else (unless you have an offer from an IB for sell side ER, in which case you may want to take it).
Word of warning, 80% of the advice/discussion on here doesn't apply to Australian shops. The AM/HF split doesn't really exist in Australia like in the US - they all kind of blend in together here. While there are some Funds that are more Hedge Fund like (Platinum/Antipodes etc.), all that really matters when recruiting for these guys is whether or not you know your shit. To that end, focus on learning as much as you can and, time permitting, think about getting your CFA.
If you feel comfortable PMing me the name of the shop I can give you an opinion.
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