Career Path for 5YR HF Analyst (MM vs SM)

Looking for some career advice from the more experienced guys/gals here. For background, I am a ~5YR Analyst at a single manager L/S equity HF. Typical net long, <200% gross exposure. Fund has been performing well, am well respected by the team, job security seems as good as one could expect in this business, and comp is solid (discretionary, not directly P&L tied). Overall things are going well and feel like I could stay here for a while longer. However, I am starting to feel like my growth prospects from here are more limited - unlikely our strategy can scale to much higher AUM, and unlikely people above me leave.

I don't want to take the job security for granted, but am also debating whether it's worth exploring new opportunities at a smaller firm (more senior role hopefully), or MM. I recognize the MM risk model and market neutral strategy are totally different and would take some time to learn. MM's also seem to be generally higher stress with less job security. Despite the criticisms, MM seems to be the most straightforward path to a PM job.

Is it worth taking a look? Any advice would be appreciated. Would be great to hear from anyone that has both SM/MM experience. Thanks!

Comments (16)

  • Investment Analyst in HF - EquityHedge
Aug 13, 2020 - 11:22pm

I have similar background as you. If you joined a HF young (i.e. right after banking or college), then it probably doesn't hurt to stay where you are and gain a few more years of experience with less career risk and more earnings stability. At some point, if there's no path towards managing risk at your firm or having your compensation be tied to your performance, I would consider moving. Ultimately, while the setup you're in is a comfortable one, that's not the end goal in the industry. Not to say you necessarily have to be a PM, but you should have your comp tied to risk.

If you lateral to another single manager fund, unlikely your setup will be better. Maybe you can get a seat where you're a sector head or maybe have economics in the fund, but those are few and far between, especially at established funds. Absent going the MM route, your best bet is to join a start up fund. Be selective and find one with higher probability of success and take a swing.

  • Investment Analyst in HF - EquityHedge
Aug 14, 2020 - 6:32am

Yea got this seat young, similar to you. I just want to avoid a scenario where I am seen as "too senior" (if this exists) to learn the MM risk model. You see analogous scenarios of being "too senior" in IB, so just want to make sure I'm being careful.

Aug 14, 2020 - 4:38am

Key question is how flexible are you? Do you have kids, a mortgage, student debt, a certain lifestyle you take for granted and would hate to lose? The average tenure at an MM is low so unless you really are a star (and we all think we are in this business) your downside risk is you walk away from a nice job with good pay and end up unemployed in 12-18 months' time.

Why don't you have a conversation with your PM and ask if P&L linkage is possible at your next bonus/year end discussion? I would take P&L linkage at a SM any day over the magic pot of gold at the end of the MM rainbow. It sounds like you could be happy at your current fund if you could get a bit more control over comp so best to ask if that is even possible before jumping into the fire pit of another set up.

  • 4
Nov 17, 2021 - 6:46pm

Have you been running your own paper portfolio the past few years? Learning the market neutral strategy is not that different from running a 20-30% net long book. If >50% net long, being in a lower net model will need time to get used to.

I would start running the low-net/neutral paper book as soon as possible, it will get you prepped for an eventual MM role and a move to managing risk.

Most Helpful
Nov 17, 2021 - 11:13pm

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