Equity Research, Investment Management, Asset Management and Fund Management

Bonds27's picture
Rank: Senior Chimp | 29

I have had three internships as an undergrad. - wealth management, credit analyst and a boutique investment bank. My question was vague; I should have been more specific. I am aware that hedge funds are private, less regulated and only open to qualified investors. I read ALOT. Most recently, I have read Peter Lynch's "One up on Wall Street" and the Berkshire Letters to investors. I have tried networking - but there are not many well established alumni in the Asset Management or hedge fund industries. I have several pitches developed for interviews. My real question is, if networking is not doing the trick, how do I get my foot in the door for an interview? How do the interview structures differ for Equity Research, Asset Management and Hedge Funds (when I say equity research I am referring to sell-side)?

Adding on to that, what asset managers do I have the best shot at getting an interview with? Should I focus more on larger institutions and entities or smaller places?

Comments (9)

Best Response
Oct 11, 2016

To be frank, your chances are not looking good. Given that you're about to graduate with no relevant experience (sorry, PWM is a stretch even in the best of times), there's probably no realistic course of action you could take to break in. Also, if you're only now asking the differences between investment/asset management and hedge funds, it speaks to the lack of conviction which will likely be apparent if you're put next to kids who have spent the past four years doing nothing but preparing for a career in whatever finance discipline it is they're interested in.

With that in mind, here's what you can do (roughly in this order).

1) Read, read, read, and read some more. You need to beef up on your knowledge of what investing is at a very basic level (you appear to have little to no knowledge on this front). Things written by Ben Graham / Joel Greenblatt / Philip Fisher would be a good start or even sell side reports if you can get them. I have my doubts as to whether you actually 'want' to break into equity research or if you just heard that it's a cool gig. Educate yourself before you do anything else or all else will be in vain.

2) Network like a rabid monkey. Well, maybe not a literal rabid monkey, but you get the point. Even from a non-target there's bound to be somebody who made it to some type of equity research /asset management role. Even if they're in sales or something more tangentially related, beggars can't be choosers. Reach out to them and be super respectful of their time and try to learn more about the industry from them. If it goes really well you can even ask for a referral, but you'll have to play by ear on that one. A major benefit of talking with real people is that you will learn the lingo of the business as people in various industries definitely talk in a certain way and use particular vocabulary. Picking up on these subtle clues is important.

3) Develop a stock pitch. In the unlikely event you get to an interview (not trying to be mean, just pointing out objective reality) you will absolutely need to be able to pitch a stock. If you can't do this, you have almost no chance of breaking in. Also, if you find the task of writing up and structuring a pitch an unenjoyable task, you're probably not cut out for this industry.

4) Pray. While I'm being flippant with this last point, the idea is that you need to walk into this with a realistic set of expectations. Based on the limited information you provided, I cannot envision a path with an acceptably high probability of succeeding (i.e. >10% chance) to recommend any one specific path. As such, you would do well to consider other industries whether it be FP&A, investor relations, M&A, accounting, etc.

My parting thoughts are that you are up against incredibly tough competition. Without a compensating level of effort, you will have no chance. With an immense amount of effort, you will have a small chance. This is a shrinking industry where the survivors are all fighting over a shrinking commission pool and competition will not ease up within any time frame that would matter to someone looking to break in right now. Best of luck, feel free to ask more questions later on.

Cheers.

Oct 11, 2016

I have had three internships as an undergrad. - wealth management, credit analyst and a boutique investment bank. My question was vague; I should have been more specific. I am aware that hedge funds are private, less regulated and only open to qualified investors. I read ALOT. Most recently, I have read Peter Lynch's "One up on Wall Street" and the Berkshire Letters to investors. I have tried networking - but there are not many well established alumni in the Asset Management or hedge fund industries. I have several pitches developed for interviews. My real question is, if networking is not doing the trick, how do I get my foot in the door for an interview? How do the interview structures differ for Equity Research, Asset Management and Hedge Funds (when I say equity research I am referring to sell-side)?

Oct 11, 2016

I have had three internships as an undergrad. - wealth management, credit analyst and a boutique investment bank. My question was vague; I should have been more specific. I am aware that hedge funds are private, less regulated and only open to qualified investors. I read ALOT. Most recently, I have read Peter Lynch's "One up on Wall Street" and the Berkshire Letters to investors. I have tried networking - but there are not many well established alumni in the Asset Management or hedge fund industries. I have several pitches developed for interviews. My real question is, if networking is not doing the trick, how do I get my foot in the door for an interview? How do the interview structures differ for Equity Research, Asset Management and Hedge Funds (when I say equity research I am referring to sell-side)?

Adding on to that, what asset managers do I have the best shot at getting an interview with? Should I focus more on larger institutions and entities or smaller places?

Oct 12, 2016

Given the additional information provided, I imagine a credit research role would be more up your alley. No one is expecting some college kid to publish the most insightful research and given that you've done a stint as a credit analyst, you can probably go in that direction. Still not quite sure why you're interested in equity research.

To answer your question, networking is literally the only way to get your foot in the door in the absence of on-campus interviews. While it's possible to pump out job apps through firm websites, that is a very low yielding strategy (though not impossible).

In my experience, there are few differences in the interviews for HF / AM. Sell-side ER is similar, though they seem to focus more on career path and soft-skills questions than the buy side interviews I've had.

Lastly, you have no 'best' shot with that background. Sorry. You should probably focus more on smaller places as there'll be less competition and less structure (which is good for you because your background would likely not make the HR cut even at most shops with a structured environment, absent some strong networking. Between industries, I'd generally think that sell-side ER at some small boutique should be marginally more attainable than a small AM/HF, but there's no clear delineation as it heavily depends on the market you're applying into and the needs of the individual shop.

Again, I get the feeling that your last two questions miss point #4 from my first post. This is a shrinking industry (both buy side and sell side) and you're up against very stiff competition from kids with better credentials and out of work professionals (a lot of the latter these days). As I am still unable to understand your interest in this field, without the benefit of other information, I would counsel you to look to greener pastures.

Oct 11, 2016

You should start by firing up google or searching this forum for those same questions which have been asked and answered many, many times.

Oct 12, 2016

It is tough out there man. The big AM shops are getting absolutely pounded with steady outflows right now. Assets are consistently flowing out of actively managed funds and into the passive strategies (ETFs, Dimensional, Vanguard etc). The DOL rules that take effect next year will exacerbate this even more as we will lose our ability to pay commissions to advisors. No one is quite sure what the net impact of this will be but everyone is expecting it to be bad for the actives. As a result, almost no one is doing any meaningful hiring right now. There is not a formal freeze per se, but everyone is just kinda looking around wondering who is going to blink. Last week we saw the first sizable deal in the Asset Management space in a while (Janus + Henderson). I think we will see more of this as scale benefits and shrinking asset bases require it. When two big asset managers combine, you have two overlapping research teams. E.g. there is definitely a guy who covers the same shit that I do at asset manager B, so who keeps their job? Certainly not both of us. This means you have a lot of experienced people who will leak out into the job market. I think it's really important to understand this context before you commit yourself to a career in ER/AM/HF. It should get better eventually and performance drives everything, but just know that you are facing a really big headwind right now.

To give you some context, I head up recruiting for our firm at a top 5 MBA program. I usually get a stack of about 100-130 resumes, which we whittle down to 14 or so 1st round interviews. About half of those 14 have previous buyside or sellside ER experience with the remainder some smattering of banking, PE, consulting, & random non-traditionals. The past two years I've brought one person back each year for 2nd rounds. Neither of those people have received offers. What's worse, this past year we had five candidates back for second rounds; Wharton, Stanford, Chicago, Columbia x 2. All of them were stellar. Literally any of them would have gotten an offer the year I came through the mba internship program. None of them got offers... We're $500B-$1T in assets and making zero offers on the equity research side, that is pretty grim.

I want to encourage you to keep your head down and I came through a very non-traditional route so know it can be done, but just want to echo that it's important to have realistic expectations given the environment. I can talk more about ER vs. AM vs. HF interviews if you want (done them all) but wanted to at least level set the discussion.

    • 4
Oct 12, 2016

I have received a lot of feedback that AM / HF and especially ER are all dying breeds with the transition of investor preference from active to passive. My interest in equity research comes from my years of investing my own money into the stock market. In high school, my grandpa gave me some money and said "go find your favorite company." My investing strategy has more depth to it now, but long story short, that is how I become interested in equity research. As a senior, I also run the investment club at my school in which we invest alumni donations into the stock and bond markets. It is the part of finance that truly interests me, and if it really is a dying breed, than what area should I pursue?

Sidenote - After spending some time at a boutique IB, I've realized IB is not for me.

Oct 12, 2016

I hear you - and I'm sure you can still find a few decent opportunities. But I guess I'm just recommending you think about what that long term career track may look like, and how it's likely to be different from the last 20-30 years.

I do still think there's definitely a place for people who are passionate about investing, but honestly I'd probably recommend looking at places that have not yet developed mature Asset Management industries. Move to Vietnam or Indonesia or Thailand (or the mother of all EM's, India) and find a mentor who can teach you about the local market structure, businesses, government etc. Those are markets where good active managers can absolutely kill it over the next 30 years. You'll have markets that have good underlying economic growth, expanding middle (and upper) class, a developing securities industry, and a few good established players who you can chip away at their market share. Hone your research techniques there and before long you'll have a unique skillset and either have the option to come back to a developed market in AM/ER/HF (or MBA) or things will be moving along so fast that you'll want to stay and build your book there. Honestly if I was a senior in college today, that's what I'd be hustling for. The pay might suck initially but who cares, cost of living is low and you're playing the long game.

The other place to look would be VC. Tough for that business model to be disrupted by the passives. Do you care about tech?

    • 2
Oct 12, 2016
Comment