HF career advice
Hi all,
Hope your week is going well. I’m a current member on WSO, but made this throwaway for anonymity.
As a quick summary, I hail from a non-traditional background (think natural sciences). After some time, I was able to progress into a role at a special situations hedge fund (sub $50mm). As of now, we’re a two person shop. I’ve had the good fortune of landing my role at a good place, and my PM is a great person.
While I work full-time, I’m also chasing a part-time/Executive MBA at a solid school in NY (think Cornell/NYU/Columbia).
Given that I’ll have my degree around this time next year, I’m beginning to think about my situation.
In my current role, I am functionally the chief analyst. I bring ideas to the PM, we have in depth discussions/analysis, and he executes/trades mainly. My PM treats me like an equal, respects my opinion, is kind to me, and ultimately, makes me feel good about my job. I’m coming upon my first year at the fund. In this time frame, the PM has done a lot for me including promoting me (title increase even though we’re small).
I currently make around a base of $85k per year, with a year end bonus coming (provided we can maintain numbers). Our fund is up 10-15% Ytd.
A few questions for you:
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Should I position for a raise now given that it’s a year? I would ideally try to target $100k.
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After I get my MBA, I’d like to position for another raise (funded my degree through loans and will need to start paying it back). At this point, I’d like to target $125k-$150k base. Is this realistic given my shop size? What should I do if I can’t get these numbers?
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I’ve registered for the CFA level I in December while taking a full course load in school (I think I hate myself). Is the CFA worth it after an MBA? Finding it tough to bury myself in studying on top of school and work.
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I think that there’s opportunity to grow at my fund (the PM says that he can see me progressing into a CIO type role), but ideally, I’d like to become a PM at some point. With this being said, my PM has indicated that he has no issue with titles and is flexible. Should I stick around after my MBA or pursue another opportunity? As another point, it’s really, really, hard to raise capital.
I appreciate all your advice. Thank you for your time.
I'm a PM at a $bn fund. I think you are kind of missing the forest from the trees. I can understand your desire to get a bump in your base but you are not being appropriately compensated for the risk you are taking on, especially given that you are mid-career at this point. Your PM knows this and knows that he is getting the better end of the stick. Unless you see a clear path for the fund to begin scaling over the next 12 months, I would not plan a career around it. Look elsewhere for other opportunities, get compensated appropriately for the risk that you take on, and do your best to keep pushing forward. Best of luck!
Hey,
Thank you much for your reply- I really appreciate it. Your insight and perspective is very helpful. I also think you’re right in that I’m not getting any younger, and I should have my pay reflect that (in tandem with the risk that I assume).
Given that I’m relatively new to the HF world (roughly a year), and based on the size of our fund (2 person shop), could you share what you think would be appropriate compensation just so I have an idea? I would typically check Glassdoor/find other means to validate this, but I think my situation is atypical.
Thank you again- I sincerely appreciate your time.
I actually think that he is paying you fairly given the size of your fund. My point is simply that there isn't much to go around when you are sub-50mm, especially when not all of that is fee-paying. I would encourage you to ask for a raise, but your boss doesn't actually take home that much from what I can estimate of what it costs to run your fund. Now that he is interested in raising capital, he will need to front a lot more costs for the foreseeable future to build out the infrastructure that investors would like to see. Meanwhile, you could work for a larger fund and make more there simply because there is more to go around. That said, there is something to be said about working for a good guy. That is special and certainly a rarity in this business.
Question, how would risk be measured as far as compensation and bonuses are concerned? Or is this geared towards mid-senior levels only?
i would suggest waiting until you have been at this fund for 2+ years before you start looking. Give your PM a chance to show how he values his chief analyst, you (aka...your bonus). If the fund is up 7mm (assume 20% payout = 1.4mm performance fee), then your PM should have no issue making your total comp 200k (so, a 115k bonus in addition to your 85k base). (in the HF world, its normal for bonus to be significantly larger than base...because what if the fund loses money next year?).
Given the size of your fund (50mm) its not realistic to target a 150k base...maybe if the fund had 200mm in AUM. You'll need to wait for the fund to generate a track record of 2-3 years before your PM can raise capital...there is career risk...but there is also potential for significant rewards (that would be harder to get at a larger fund where you are a small cog in the machine).
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