With all the talk about the new KKR analyst program, I thought it’d be good to gather some thoughts on if it’s better to join a top PE or a top HF analyst program out of school.
Which provides better training? Gives more responsibility? Pays more? Leads to better long-term career prospects?
Especially if someone were considering PE like KKR, Blackstone, Silver Lake and a HF like Anchorage, Silverpoint, DE Shaw.
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From my networking PE is a more stable career option
Depends on what you like more. Good luck getting an option from either though.
Training: Debatable. PE is more formal, HF more varied. Either way you learn a lot, but HF will be more volatile and less structured.
Responsibility: HF. Fewer analysts, higher expectations. You'll be given more tasks and responsibility much faster.
Pay: HF probably, especially with firms you listed. PE pays under top banking. HFs pay above (sometimes well above) it.
Long-term: PE will leave you more options. If you want to be an investor, then HF is a better, but more narrow path. Both options are good for your long-term career though.
Few people get offers from multiple places of this caliber. Generally people who are capable of getting the HF offer prefer that path, but that's not to say it's better, just self-selection based on interest.
Why makes you say that if long term, you want to be an investor, HF is a better path?
Because that's what you're doing at a hedge fund. You constantly get exposure to new ideas, and likely contribute (at least to some extent) to names going into the book. As a PE analyst you spend more time doing traditional IB analysts tasks (especially model grinding), and generally see far fewer opportunities (and ways of thinking through an idea). Perhaps you could argue it's a different style of investing that PE teaches.
Do you think you're maybe a little biased thinking with a bit of a grass is greener lens? Not judging or calling you incorrect, I just think that there's so much variability with the investment process from ideation to execution in both PE/HF that it's hard to make a blanket statement like "if you want to think like an investor, HF will let you do that." Factors like strategy/general velocity of investment in the HF space are so variable that they may even start to look like certain private market plays i.e., certain event driven/activist strategies almost akin to investments that a PE firm may make. I've always thought of the two as being primarily differentiated in terms of the liquidity of the investment and how deep of an operational approach you take throughout the life of the asset. Obviously plenty of other factors but that's at least always been my conception, would love to hear some other key differences you've seen/heard.
EDIT: PastaLover2 sorry meant to reply to your comment
Investment approaches obviously vary massively, but objectively a PE analyst at a firm like Silver Lake / Blackstone spends significantly more time doing process/grunt work for more senior members of the firm than an analyst at a comparable hedge fund.
I know you are going to hate to hear this, but it really depends on what you really identify with. If you think longer-term and like to potentially get involved from a high-level strategic/operational point of view, then you should do PE.
If you enjoy following stocks, macro/sector trends and enjoy investing in the public markets then you should go the hedge fund route.
And if you do not know what path works for you, then you should take the route that provides the most optionality going forward. PE is likely the best choice in this scenario as you can always move to a hedge fund after two years in PE. Moving from HF to PE is not as common.
There are many different types of PE firms and Hedge Funds, so it really depends on what type of style you prefer. Growth/value/distressed/activist/short-term/etc.
I would suggest to try to talk to as many people as you can on the buyside to get a feel for what you really identify with. I probably talked to dozens of people on the buyside and worked at a few places before figuring out what type of investing style I really identify with.
Read blogs as well of people who are on the buyside. Buyside Hustle is a good one and has some articles on PE/HF life and exit opps.
You said it was less common for people to move from HF to PE. Why do you think this is so? Is it because the skill set is so different with the need for deal experience? Or is it just ‘cause there is a perceived belief that comp in HF can potentially be higher.
Skillset is different. PE is very process oriented and you have to deal with a bunch of different counter parties. They like to hire young straight out of banking for associate roles or from other PE shops for more senior roles.
Not saying it is impossible, but I haven’t seen anymore make the move to PE if they are at a hedge fund.
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