Recruiting Process for Hedge Fund from IB Analyst Role
I'm gonna be an incoming analyst at an EB in NYC, and I'm interested in eventually moving to a hedge fund rather than PE shop. I know that headhunters reach out to IB analysts, but it seems that the path to PE is much more structured. Can anyone shed light on the HF recruiting process for an IB analyst? Much appreciated.
That's right. The hedge fund process starts alongside the PE recruiting process for most of the large hedge funds. They want to get a look at some of the top tier talent before the megafunds pick them off. Outside of the February PE cycle, big funds and small funds alike will be hiring off-cycle on an immediate to "next summer" basis as needs arise. Getting interviews is similar to the PE process - the funds typically recruit through the major headhunters. You'll want to make a good impression on the headhunters with better hedge fund relationships (typically SearchOne and Dynamics considered two of the best in this area).
That makes sense. Thanks for the knowledge!
As mentioned by the above poster, the most well known names in the hedge fund space will be represented by headhunters, so you need to get past the gatekeepers so to speak.
You're also right that PE recruitment is also a lot more structured than HF recruitment. Generally, the bigger the HF, the more structure and the more predictable hiring timing you'll experience. However, some of the most well known funds are quite lean in terms of headcount, hence they do indeed hire on a needs basis and opportunities can arise at random times - this can mean that many funds seek talent at once or you have sporadic opportunities popping up.
Thankfully for you, HFs in the US tend to prefer IB analysts over any other front office professionals, at least when it comes to fundamental L/S equity shops and definitely stuff like event-driven / merger arbitrage and similar funds. In short, this means you'll get good looks as long as you're part of a solid team at a solid bank. However, I'd personally still make an active effort to reach out to the key headhunters for an introduction conversation in order not to leave this down to chance (i.e. hoping that they get in touch with you themselves).
Hedge fund recruiting in investment banking, starting with first year analysts, typically consist of 2 groups of funds: the mega-funds including Citadel, Point72, Millennium, Fortress, Bridgewater, UBS O'Connor, etc, vs. the mid to small funds with lean teams.
Mega fund recruiting is similar to the private equity process. Most of these hedge funds have internal recruiting teams, or are represented by tier-1 headhunters such as Glocap. Mercury, Pinnacle, Heidrick & Struggles, etc. They have a projected number of openings they want to fill for the summer next year, and they typically begin reaching out to investment banking analysts in February to March of the current year. The process used to start at around April to May, but has been pushed forward every year to compete for top talent against competitor funds and against private equity.
You will begin hearing from these headhunters in February to March, and you need to prepare for the process a couple months before that. That means you should start during Christmas to read up on hedge fund strategies and prepare your investment pitches. You should also network with people at these funds and get on the tier-1 headhunters' radars starting in January to get an edge on recruiting. Interviews for mega funds are typically 3 - 4 rounds, with 12 - 18 interviews, and include a modeling test or a pitch.
That's the process for mega funds. Let's talk about the mid - small funds. These funds have lean teams and don't have good visibility on their hiring needs until someone leaves after the bonus season of the current year. Bonus season is usually January to March. When they have a hiring need, they'll engage a headhunter in January to March and begin to recruit for an immediate start, but are flexible to hire analysts after their bonuses are paid out in the summer. These funds are usually smaller long/short funds, or have a niche proposition - have an industry focus or use a specialized investment process.
For these funds, get your pitches ready to go because the recruiting process is ad hoc and can happen fast each year during January to March. But the better approach is constant networking. Start networking with smaller funds that you are interested in, and when they have a hiring need, you'd be at the top of their list.
There are few mega funds and the industry is fragmented with thousands of smaller funds, which is why the hedge fund recruiting process is much more unstructured than private equity.
I hope this helps.
+1 SB, great reply. How much does GPA matter with in HF recruiting vs PE recruiting for the bigger funds? Is it a bit more lax, and more focused on idea generation and experiences in AM & experiences in things like restructuring/M&A for IB? If my GPA is a bit on the low side, anything I can do to compensate for it?
Is Investment Banking the gold standard for breaking into the HF industry (2nd half of 2017 --->) (Originally Posted: 07/03/2017)
Is investment banking (BB/EB/MM) the gold standard for breaking into top HF? Have ER and S&T pretty much become a crapshoot for Top HF in 2017?
Your thoughts.
Breaking FT IB contract for HF? (Originally Posted: 08/05/2015)
Hi all, posting under a new name to maintain anonymity. I will likely be getting a full-time return offer from MS/GS at the conclusion of my summer. I am also early in the process of an attractive opportunity to join a hedge fund , as an analyst out of college, for next summer (think DE Shaw / Point72 / AQR).
The only problem is that I am graduating early, and I would potentially start at the BB in January 2016, and then leave after 8 or so months to join the HF in August '16. I definitely want the 8 months experience at the elite BB and obviously the power it carries on a resume. I also want the HF spot for reasons that are self-evident.
My question is, how frowned upon is leaving after 8 months and "breaking the contract", in light of early banking exits being increasingly common on the street these days? How much could leaving after 8 months potentially stain my name / reputation and burn bridges? I have built good will within my group this summer and am liked by all, but surely I cannot come forward with my plans to exit the BB a few months into my analyst program, right?
TLDR: Is taking BB offer and breaking contract 1st year for HF worth it from a risk / reward standpoint?
The important thing to remember is that there is no contract. "Right to work" laws cut both ways. I would not sweat it.
Leaving the bank before 2 years is traditionally frowned upon but it happens more often than you think. The only downside I see is the hypothetical scenario in which you one day wish to return to investment banking. e.g. Suppose the hedge fund role ends up not working out and you wanted to do banking again. A resume with only 8 months of banking on it is not going to impress a career banker.
Thanks. Anyone else?
You don't owe an employer anything just as they don't owe you anything. With this in mind don't expect them to take the news well, or retain the relationship. That being said there are professionals in the industry who handle these situations with maturity and see the opportunity while not criticizing the junior banker.
If I was in your spot I would take the bank then save up my salary in order to reimburse the bank for the unfulfilled portion of the bonus.
Who knows, in 6 months you may love the bank and decide to stay.
This is definitely Point 72.
This is interesting. Is Point72 really that strong? Basically a family office now, no? I'm not as familiar with them as I am with D.E. Shaw or AQR, but this comment surprised me.
Frowned upon, but no one would blame you. A majority of others would most likely do the same.
Of course it's frowned upon, but lots of kids leave within the first 12 months of their analyst program to join HFs. Take the HF offer and never look back.
Analysts leave before the 12-month mark for HF offers all the time, particularly in the top BB groups, Moelis, etc. Your other analysts will be encouraging and mildly envious, and most of the time the seniors aren't even going to remember you a few years down the line.
Go ahead; take both offers (presuming you receive them), get the banking work experience, and two weeks before your second start date, tender your notice at the bank. They'll turn your phone and email off and ask you to leave immediately obviously, plus you'll forgo the bonus, but at the end of the day you attained your goal. You learned a remarkable amount at a fantastic sell-side institution that will be the oldest name on your resume forever, and you secured a more intellectually rewarding job with better career trajectory and financial upside right out of the gate.
The only wrinkle here may be that the bank will ask you to start in March. Out of all the people I know who graduated early, I don't think I saw a single one start right after the holidays. That's entirely anecdotal, however.
"The only wrinkle here may be that the bank will ask you to start in March. Out of all the people I know who graduated early, I don't think I saw a single one start right after the holidays. That's entirely anecdotal, however."
That's what caught my attention in this thread, as I will potentially be in the same situation as the OP. I'll have a winter graduation, will (hopefully) be a summer analyst at some firm in 2016, so I was curious as to how early I could start.
Initially I was under the impression I would have to start in June to join the rest of the incoming SA class, but if I could start right around January 2 that would be ideal. And how would promotion go in such cases? Would you still be promoted after exactly two years or would you have to go a few months extra to be in line for promotion with all the other analysts who had standard summer graduations?
Again, I haven't seen January start dates, but that's entirely anecdotal.
Unless you're in a personal position where you need income for a few months, don't be in a rush to get a temporary job. You'll soon be in a position where you have money but no time to spend it enjoyably. Travel, go live with relatives, volunteer, be a ski bum, beach-sit somewhere sunny for a few months. Anything but work, unless you're literally in a position where you'll starve without it. And if that's the case, move to NOLA and get an hourly-wage job and enjoy yourself in a way you won't ever get the chance to again.
On your resume, simply write "Class of 2017" and ignore the month. No one will blink.
My flight boards now. Good luck.
IB to Hedge Fund/Sales & Trading? (Originally Posted: 02/27/2008)
I have seen a lot written about IB to PE or VC, but do former analysts ever go to Hedge Funds or Sales/Trading at bank they work for? If so, are they relatively easy transitions?
It is fairly common for IB analysts to goto HFs after their second year, almost as common as going to PE or VC. There is very little difference between many hedge funds and PE firms aside from time horizon. So, OZ will look at an 18 month time horizon vs KKR's 5-7 year. Obviously, the issue is much more complicated than this simple difference. HFs, especially more trading focused HFs, tend to look for analysts that are natural investors (ie they read all the right books, invest their own funds, and watch CNBC).
As to moving to S&T, it does happen, it is more difficult than some of the other paths. The reason for this being, you don't have the requisite skills or relevant experience and they may make you take a title cut to make the move. Friends of mine who were IB and then decided they really wanted to be S&T or HF did things like ECM or moved to a prop desk where their analytical skills (and analyst skills) were a more direct fit.
This job, in all ways, whether you want PE/HF/IB/S&T its always easiest through connections. If you want to move from IB to S&T after a year or two, you will have to work people you know on the other side of the fence as much as any headhunter.
How do IB'ers add value to HF's in terms of exit opps (Originally Posted: 12/25/2009)
Hi guys,
everyone seems to mention that there are good exit ops in hedge funds after IB but I'm curious to know what these actually are. Given that the work in most hedge funds is alot more quantitative than IB I can only see former bankers adding value in areas like risk/merger arbitrage. As such, is this really the only area that bankers usually make the transition into? I find it hard to see how any HF's would favour IB'ers over a trader for other areas of their funds but I admit that I have no idea so please correct me if I'm wrong.
Cheers
Its limited - some funds who are more focused on valuation will need IB analysts but for most HFs they will more likley take capital markets kids (who count as part of IBD)
first question is why you'd be interested in working for a hedge fund after 2 years at an IB? could be interesting, but you need to think that one through first.
all that said, there are a ton of diff types of hedge funds, so you'd really need to ask about this more specifically
for example, there are extremely quantitative funds, where a PhD is probably more applicable than an MBA or 2 years of IB or even 2 years of HF
then, there are others that are more long / short oriented and are buy / hold investors with long time horizons. these are likely the best fit for someone who worked at an IB, and there are tons of them out there
the skillset you learn, or should learn, at an IB is invaluable and should really help you in such a HF job, but the term "hedge fund" is as wide as the grand canyon and you really really have to know what you are targeting
PM me if you want some more specifics, etc.
Good luck man.
^^ agreed
can u go from an M+A group for a financial sponsors group to a long short equity fund?
HF salary cut after IB; normal? (Originally Posted: 12/02/2012)
Hi Guys,
I am considering a position within the London team of a NY based HF (c.$10bn AUM), after approx. 2.5 years of M&A within a BB. I love the role; however I have been offered a (base) salary which is lower to the current one…
Does anybody know if this is “normal” (in their defence, the role is quite different from M&A: would be non-performing loans)? Also, any view of the salary I could/should expect for such a position (potentially fix + variable)?
Any view would be very much appreciated. Thanks in advance.
Not sure about London, but in NYC that is not something I have seen. Most guys at my bank saw their base move from ~80k as second years to anywhere from ~110k-150k as first year investment associates. Note: this is just in my experience. If you plan on negotiating, I would try to get as many data points as possible
I would renegotiate. With a fund of that size, they should definitely be upping your salary. Most guys I know of who went over to the buyside were making at least $130K on the base.
I don't think the base is at least 130K. (maybe for HFs, i don't know) Most PE funds pays 100K base, and All in comps should be around 200K~240K. With most funds paying all-in at 200K.
This is easy to understand. Does your M&A experience help your work with non-performing loans? Most likely not. Your usefulness to them is not that different from someone fresh out of college, and they pay you accordingly. If it were a long/short HF, in which your M&A experience would help your role, then they will pay you accordingly too.
With the HF, you are hired to do a job, and you are paid according to your usefulness to them.
Exactly what HedgeKing said.
Try to negotiate BPS on the performance. Either directly tied to your performance (sometimes hard to point out how much you contributed.) or at the fund level.
This is good advice. Try and see if you can swing a paper portfolio instead. All your pitches will go in there, and you will determine the weight at every quarter. Performance will be based off perf. of this portfolio and not the entire fund. I'm assuming you're doing investment sourcing and not just due diligence.
Or if you can swing bps of entire fund, try but that is unlikely.
the sell-side in london has aggressively raised salaries in the past not all buyside shops have kept up.
base salary is irrelevant on the fund side to some extent as it is all about total comp, some funds are just a lot more bonus weighted than others. I know several guys at london funds that got a slight base downgrade but whos all-in came out ahead of banking comp fwiw.
Just figure out what bonus potential. Quite frankly your current salary is also somewhat irrelevant,a few years down the line in a good year your take-home may well be large than your cumulative life-time earnings up to that point fwiw.
i-banking to hedge fund - comp? (Originally Posted: 05/24/2009)
What's "street" comp for a small hedge fund after a 2 year i-banking stint?
Sorry I can't help with the answer to your question but I'm sure others can and will. But I am interested in what steps one takes to make this transition in this environment. Can you shed some light on that? Thanks.
3rd year Boutique IB Analyst -> HF Analyst (Originally Posted: 10/21/2016)
Hi All,
I started out over two years ago trying to make my move from engineering undergrad to the investing world. The shortest version is I studied cleantech engineering undergrad > got laid off from a startup that failed to raise VC before I even started that job > did a year of energy efficiency consulting > decided to pivot and got a job a boutique IB in their cleantech coverage team. Now I have finished my second year and they offered me a third which I have turned down. Since the outset, I always looked at banking as a means to build the financial skills on top of my existing analytical skills from my engineering background. I never intended on staying in banking long term, but knew it was the proper stepping stone to the hedge fund world.
Having completed my second year I am having enormous difficulty finding any funds with openings (my interest is L/S). So far I have tried going out to a slew of headhunters but have seen very limited return on that. I have contacted a few MDs in my bank that I feel comfortable talking to about my move and they have given me a few names of people to connect with in the industry. I have only had a few conversations, but they usually err more on the sides of advice rather than leading to opportunities. That being said the advice is usually helpful and it is interesting to hear how their mindsets have developed during their careers. I have reached out to a few friends from undergrad that are at hedge funds but the numbers are quite small. I also have been monitoring my college job board to see if any HF analyst roles are posted and I have seen a small number of opportunities, but it has not been particularly fruitful. Also I am monitoring linkedin for the odd post by the mega HF shops.
I guess my ask here is the following two items:
1) I know it is a very difficult time right now across funds, but is there anything else I should be doing to accelerate my job search? I have finished my time at my current job and can leave virtually anytime. I am ready to go!
2) Those of you that came from banking (particularly non BBs) to HFs, what was your path? What worked well? What didn't?
Thanks in advance
They offered you a third year and you turned it down without having something to do instead?
I didn't exactly outright turn it down. I was honest with them and said I enjoyed working with the group but I was not intending on staying for my entire third year. All of that is true. They are happy having me until I find something, which is nice. I think they are still hoping that I stay. If I do find something I would ensure I give them enough time to transition work etc.
Sapiente officia quia repellendus ut consequatur quia atque. Amet porro assumenda omnis omnis corrupti iure vel. Delectus maiores voluptatibus quia expedita omnis. Id repellat nam eum consequatur dolor placeat inventore.
Et quia enim voluptates odio corporis illum quo. Recusandae et qui aliquam magnam veniam iste aut. Fugiat harum nihil excepturi id perspiciatis. Molestiae voluptas sunt quam. Aspernatur cumque vitae vitae recusandae omnis quasi.
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...
Beatae qui deleniti quidem nobis voluptatem commodi officia. Non nihil ut deleniti minus quia aspernatur dolore.
Quae est fugiat unde rerum. Labore ipsam tempore unde ut dignissimos dolor. Ipsam consequatur fugit omnis dolores ea assumenda et.
Alias quibusdam quas commodi recusandae voluptatem id. Ea reiciendis qui delectus recusandae beatae.
Repudiandae et fuga non est doloribus. Ut beatae tempore id et fugit qui nobis.
Esse tempore placeat maxime earum. Illum eos sint quae libero est non. Nemo non et ut cum. Dicta iste tempore esse et saepe.