Global macro: trading vs. research-focused
Have seen some differing opinions on global macro. Some say...
I work at a fairly large global macro group in a diversified hedge fund. we don't take that many sell-side traders (not because we dont need them, but simply because we don't need that many of them- its not like we're actually making markets), most of our people are research
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while others say...
Where I work analyst is not often a path to PM for this very reason. The analysts are basically grinders who churn out research but they usually gain very little knowledge about the products we trade or how to manage risk and actually run a book.
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Does this discrepancy exist because there are simply different types of macro fund setups - trading vs. research-focused? A shop like Brevan, for example, mainly hires former sell-side trading desk heads into PM roles, whereas it seems better to be a research guy at a shop like Bridgewater (see how investment associate, not trading associate, is the front office role there).
Is this distinction valid?
There is no "standard" organization of a HF. I wouldn't say each one is in a different ballpark but before going into IB I did a summer internship at a multi-strategy HF and the following one at a 'similar' place yet the organizational structure/customs of the shop were completely different.
yes different funds can certainly have different philosophies about hiring...where I work we really only hire research people to be analysts and they tend to stay as analysts for their careers. When we hire portfolio managers/risk-takers they are almost always people with trading experience either on the sell-side or at another hedge fund.
Thanks Bondarb. Do you have some idea of which of the major funds fall into each category? For example, I get the impression that Brevan is trading-to-PM and Bridgewater is research-to-PM, but don't know about the other big names (Caxton, Moore, Tudor, Soros, GLG, DE Shaw).
I'm specifically interested to know which of the well-respected funds have the research-to-PM hiring philosophy, as I personally find macro research more interesting.
I tend to think of all the big multi-manager macro names as more trader-dominated...ie Tudor, Soros, Moore, Brevan, Fortress, Caxton, Millenium etc. Thats not to say that occasionally they dont have analysts who become PMs but these places tend to hire traders to run risk in my experience. These places have big research arms and analysts can be very well paid but generally its traders making the final decisions. I tend to think of more equity and credit funds as places where people who are in research or called "analysts" can be responsible for making the actual portfolio management choices.
Is this because a lot of Macro trading .. getting into/out of positions , sizing bets , dealing with 24 hr risks is a skillset that rates/FX traders have and analysts can't easily acquire? Conversely , how do traders who are mainly dealing with flow develop the deeper insight for a slightly longer term macro bet. It seems that there's no standard , well-defined path here.
Perfect, thanks again for the info
yes managing risk properly and understanding the various products and markets is a skill that takes a long time to master and very few people have it...and it has only partial overlap with the sell-side trading skillset. So is proper data analysis and understanding how to do macro research. Generally an analyst doesnt get enough exposure to PMs and the market to be good at both.. I find most of our analysts are extremely inteligent, probably higher IQ on average then the PMs, but when you talk with them about markets they have glaring weaknesses...you can just tell they havent had the market contact/experience to run a book. Also, there is still in an old-school mentality where the PMs are generally very big personality-types...its kind of the swaggering risk-taker mentality. Generally analysts are more cerebral and introverted which rightly or wrongly I think turns people off to them as potential PMs.
Would you agree that it's easier for a sell-side trader who already has the market contact and position management experience to pick up the "idea-generating" component of research on the side, since they have to take views in the course of their market-making anyway? And that it's more difficult for a research guy to pick up the markets experience on the side?
(btw, how are sell-side market-makers in a specific product supposed to learn the other products/markets while still on the sell-side? it's not like a rates trader can walk over to the fx desk and ask them to teach you all about what they do...)
I went through a couple of your posts where you said the chances of making it to PM are miniscule anyway, so it may as well not matter where you start. Having said that, when you refer to hiring PMs "with trading experience either on the sell-side or at another hedge fund" - do you mean execution trading at a macro fund is looked upon favorably?
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