Credit funds

Lots of threads on here about long/short equity funds, but wanted to learn some more about credit funds. What would the day in the life of someone who works at a fund that focused on high-yield bonds and senior secured loans look like, maybe compared to a long/short equity analyst? What are the differences between the credit groups of mega funds (GSO, KKR Credit, Ares) compared to more boutique hedge funds like Oak Hill Advisors, Goldentree, and Exodus Point? Lastly, would it be possible to join these firms straight out of undergrad, and if you can how hard would it be to potentially switch to something like Private Equity or long/short equity after a few years? Thanks in advance for any insight

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Comments (8)

Jul 28, 2021 - 6:01pm

Private credit lifestyle is more chill than l/s equity, esp if the comparison is between private and public. As for between mega funds/boutiques, at the end of the day your experience as a junior will differ mainly by the amount of responsibilities that you're given (your learning) and the team that you work with. The companies you look at will probably be somewhat similar.

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  • Investment Analyst in HF - Event
Oct 6, 2021 - 8:37pm

These are great seats from WLB perspective with interesting work and lean teams. Your comp caps out lower at the senior end, but through the middle ranks you generally get paid equal to MM PE or MF PC (but touch lower than MF PE) for 50-60hr work weeks. It's more comparable to a LO Equity AM type of job, except you traffic heavily in quasi-private/crossover primary deals given the nature of credit markets and idea velocity turns quicker (investment horizon is usually 1-3 years). Relatively predictable schedule as liquid markets have a rhythm to it, generally at your desk earlier in the morning but also out by 6-8pm latest (ok, maybe 10pm if you're really jamming). But workflow is autonomously driven like a public market seat, not top-down deal team structure like on the private side. Typical team is like a senior analyst riding solo or maybe one junior that helps with materials. You can be presenting ideas in IC and lead underwriting as early as 5-6 yrs of experience (you wouldn't hear a peep from an equivalent Associate in IC on the PE/PC side).

Senior level is where trajectories diverge - if you're able to swing becoming a senior PM, you can clear into 7-8 figures but there are few spots at the top and the top dogs rarely leave (because it is a great, stable job). There can be 10-20 Partners/MDs sourcing deals for MF PE or PC, but only 3-5 PM seats open on the liquid side. This creates frustration for talented senior analysts, some of whom will leave for smaller shops to take their swing. Most stay put though, happy to clip the mid-high 6 figure coupon with IB-like consistency.

Work is a mix of performing HY or L/S or distressed/event-driven stuff, but a lot of these shops now weigh heavily toward the performing end with minimal/no carry. That's just where AUM flows have been in this yield environment and easiest place to raise assets as these MFs care more about their AUM now then fee structure. So you're churning through a lot of par credits to feed the machine, which can get repetitive. But market cycles turn on a dime like we saw in 2020 and all these shops have capacity to raise internal or external capital quickly to put to work on more interesting liquid credit opportunities, which keeps the job interesting. It's just a different environment that will feel more familiar to a L/S equity guy than a deal guy.

Oct 2, 2021 - 11:30am

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