Execution Trader at Discretionary Macro Fund, Career killer or valid path to PM?

CtrlAltEnd's picture
CtrlAltEnd - Certified Professional
Rank: Monkey | banana points 51

Title pretty much says it all. I'm already running my own sell-side books/risk and have some PnL history, trying to move to buyside. I'm still a little hesitant to jump into a buy-side sink or swim PM role at this point, but have some opportunities to work closely with some prominent discretionary Macro PMs/founders of multi-billion funds. However the roles are all described as execution trading.

Is execution trading a valid path to a PM or risk-taking role? Will I be able to learn from the PMs or just be clicking/booking things? I realize this varies from role to PM, are there any signals I should look for during the interview process?

Ideally I'd rather have a Jr PM title but there's not many of those spots around.

Calling HF [email protected]"Bondarb" @"Martinghoul" @"LCYM" @"Macro Arbitrage"

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Comments (24)

Mar 18, 2014

It's very very tough to generalize. I have heard of instances where things worked out and other instances where people ended up pigeon-holed forever. What you need to do is a bit of due diligence and find out whether the fund in question is, generally, amenable to execution traders jumping into PM roles, provided an opportunity. If you find that there is precedent and the senior people are flexible, it's probably worth jumping. Otherwise, I would be patient and hold out for a PM role.

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Mar 18, 2014
Martinghoul:

It's very very tough to generalize. I have heard of instances where things worked out and other instances where people ended up pigeon-holed forever. What you need to do is a bit of due diligence and find out whether the fund in question is, generally, amenable to execution traders jumping into PM roles, provided an opportunity. If you find that there is precedent and the senior people are flexible, it's probably worth jumping. Otherwise, I would be patient and hold out for a PM role.

i cant argue with this even tho i would probably say take the buyside role...it's a close call. i guess it depends whether you are really taking enuff risk on the sell-side where u think u r stretching your comfort zone, learning, and will be able to land a PM job in the near future. I usually come down on the side of "get your foot in the door, bust your ass, and good things will happen".

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Mar 19, 2014

Wow summoning people really works. Thanks for your perspective. What about new, growing funds with low headcount?

Mar 18, 2014

In my experience, new and growing funds more often than not offer a much more dynamic and fluid setting than their larger, established brethren. As a result, I imagine it should be quite a bit easier to move around, including a move from an execution role into a portfolio management one.

BTW, if you wanna PM me with something a little more specific about yourself, I might be able to suggest smth.

Mar 18, 2014

Why not try to meet with PMs at these firms and ask them yourself?

Mar 18, 2014

I've seen that happen on the macro side. As an execution trader you're still getting a decent grasp on how your products are priced, how they trade, etc. If you can articulate views and be right, you could find your way. Not necessarily a "career killer", especially since the line between trader and PM is often a bit blurry in the macro space.

Mar 18, 2014

@"Bondarb"

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.

Mar 18, 2014

it isnt career suicide by any stretch of the imagination but in my experience funds like to limit the movement between execution and portfolio management because they want to encourage the execution guys to look at execution as a career and not be in the mindset that it is a stepping stone. Also if the execution guys are constantly looking to move off the desk it can create conflicts of interest/compliance issues...for example they might give preferential treatment to high-profile PMs who have hiring influence over others. So to sum up, it is tough to move internally from execution to portfolio management, but it does happen occasionally and more generally I think it is great experience to execute...you will get to observe PMs (both successful and unsuccesful) and you will get a great fell for how the business work. If you want to be a macro PM i would take it...at least it gets you into the business as opposed to being on the sell-side.

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Mar 19, 2014

Thanks for your perspective. My future could also be an external move to a PM role, I guess I'm just worried about whether I'll actually learn about the PM's strategies rather than just looking at execution.

Mar 18, 2014
CtrlAltEnd:

Thanks for your perspective. My future could also be an external move to a PM role, I guess I'm just worried about whether I'll actually learn about the PM's strategies rather than just looking at execution.

ur job will be execution 100% and nobody will be out to teach you..but if u r ambitious and smart you will be able to watch and learn. But yeah be 100% clear that you arent signing up for a training program...execution is an important job and being good at it is hard and is a value-add. Good execution guys are ninjas.

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Jun 22, 2014

:]

Best Response
Mar 19, 2014

I would avoid giving any advice but rather share some of my own experience and facts. First of all, life in a bank and in a fund is very different in many ways. Risk-taking is even more so. Are you running a pure prop book in a bank, or a book mixed with flows? If the latter, moving to a buy-side as execution trader wouldn't make much sense. Which product line are you on? Are you able to run greeks? If I ask you to roll over my long EUR/USD gamma to long EUR/PLN gamma while trimming down my length in crude by 1/3 and shift the risk to silver shorts, in the mean time putting on a US 2y-10y steepener, how much time do you need to accomplish all this and give an updated risk outlook? If I want to close out 7,000 lots of long palm position in MDX within two days can you accomplish it without moving the market much, supposedly you know how big the market is relative to the position size? How are you going to sell 7,000 lots while bid side is only 5-15 lots on average? And what are the tickers of these futures contracts? What is the active month of each contract? These are just some quick examples that certainly don't indicate my view. I may also feel like buying some NIKKEI vols after all that gets done. (Yes it's super messy and I've never had so many risks on my book and got absolutely no fucking clue how the risks are correlated)

So this is probably what an "experienced" execution trader does in a big macro fund. If you're a junior PM and I say I'm bullish on US rates, bearish on EM equities, bullish on Ags, bearish on energy, and bullish on precious, bearish on DM index vols, can you construct a portfolio with one trade in each sector, knowing how they correlate to one another? You see, the problem is never about taking risks. If you get to learn all these things executing trades and start thinking and acting like a macro PM...

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Mar 19, 2014
LCYM:

Risk-taking is even more so. Are you running a pure prop book in a bank, or a book mixed with flows? If the latter, moving to a buy-side as execution trader wouldn't make much sense.

Who still has a pure prop book in a bank? I'm a market maker, so the latter. But why would that not make sense to move to a buy-side execution trader?

Which product line are you on?
Fixed income, rates, credit, FX type of thing

Are you able to run greeks?
Yes

Hmm... out of the two scenarios you posed, I can do both (executing the portfolio you posed vs coming up with the portfolio instruments and correlations, statistics), but the 2nd one interests me a lot more than the first.

It does seem like these roles build different skill sets and career paths, and aren't very transferable between each other.

Mar 19, 2014

Perhaps strategist suits your goal better.

May 31, 2016

Sorry to bring you back to an old thread but how did you get on in the end?

Mar 23, 2014

As someone who works in a hedge fund, this is GOLD. this is exactly what goes on,. PM/CIO will give orders identical to the above (albeit different currencies etc), but this is how instructions would be given (in my experience). And reality is execution trader relies on op's guys/trading assistants for all this info.

Mar 23, 2014

As someone that doesn't work in trading but wants to get into it, how can I learn the jargon/terminology/thought process in executing the orders/etc? Is it something they teach you at a junior level or do they expect you to just know what you're supposed to do?

Mar 18, 2014

smaller funds will give u more cross-asset experience but larger funds will give u exposure to higher-profile, more well-known PMs and u will get a better name on ur resume. Also BTW the dude above LCYM has a way too broad view of what an execution guy does (at least at a big fund)...it is more like "buy me 100M 5yrs" and u go do it no questions asked about bigger strategy...the whole thing about legging from silver to palm oil definitely isnt part of the job.

Mar 19, 2014

Thanks, this is all very helpful for me in my decisions. I'd hoped more for: PM: "I like 5yr nominal rates" trader: "well this off the run 4.7yr's cheap on techincals, heard Asian CB sprayed the street. Or we can buy payer calls if you like the convexity, or sell breakevens... etc"... at least there's more conversation there and I can pick their brains on trade generation and how they look at the world.

By the way, I hope you run another Macro Fantasy League someday, I'm sad I missed that.

Mar 20, 2014

Its not impossible but its not the norm. My experience is only from my clients perspective that have made the switch. In every case they were unable to lateral within the fund but instead make the move to another fund. Maybe this is a 2 step problem where step one is just getting to the buy side. I think smaller funds you will probably have more flexibility.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Jun 20, 2014

Aren't "execution traders" at macro funds basically the same thing as "junior portfolio managers"? I'd imagine at funds that don't have the "execution trader" role, the junior PM would do most of the same work anyway i.e. executing the trades, right?

Take a look at this posting for example - it suggests it's basically the same job:
https://jobs-mkpcap.icims.com/jobs/1069/associate-...

Jun 22, 2014

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