Hedge Fund Marketing - Third Party Marketing
I've been looking at the backgrounds of hedge fund marketers and have a few questions. I see that they seem to be a mix of the following: ex hedge fund traders or ex equity sales / fixed income sales guys. I can see how the sales roles are transferable, I'm just wondering why it is that the guys make the jump from the sell side to the buy side. Is it that the daily grind of working on a trading floor day in, day out gets too much and guys want a change? When I've been on a trading floor it's always struck me as a little sad when you see the old gray haired guys who look like they're sticking around for lack of better things to do mixing it up next to the younger guys. Or is it that there is the ability to make a lot more money working marketing / raising assets for hedge funds?
My understanding is that hedge fund marketers make 20% of the performance and 20% of the management fees on new capital they bring in to a manager, for a set period (I've been told this is usually for five years). So looking at the numbers and assuming that you have some good mangers you're marketing for as well as some good contacts and you raised in one year (assuming a fertile asset raising environments) say $200mm.
This would mean you're taking $800,000 as a cut of the management fees. Then assuming your managers do OK and 15% is returned on the $200mm you've raised (possibly a bit ambitious), you're looking at taking home around $1.2mm as a cut of the performance fees meaning a total of $2mm take home in one year.
Then, assuming that you do ok the next year and add on another $100mm you're then taking home about $1.3mm in year 2 as a cut of the management fee (now up to $315mm assuming your $200mm increased by 15% in the first year) and then whatever your underlying managers do in performance. So assuming that you continue to do ok and continue to raise assets for your managers then years 3 and 4 should be extremely lucrative.
Looking at the figures above this seems like an extremely lucrative career path and comparable (or even more) than what an MD at a bulge bracket would make in fixed income sales or equity sales. I guess one question I have is why isn't this considered to be more of a desirable career path for many people on here? It seems to me the hours wouldn't be too demanding and the work somewhat interesting mainly meeting with investors etc, or is there somewhat of a stigma to saying that you're a third party marketer which obviously doesn't sound quite as good as saying you're an MD at an investment bank. I'm guessing there is also some cold calling involved as well.
One of the reasons I'm asking this question is that I'm 31 and have been given the chance to do this as a career for a marketing firm. I'm currently at a FOF and don't see it being a viable business moving forward with investor redemptions and to be honest I don't see the money to be earth shattering unless I start my own firm and given the way FOF's are going then I don't see it becoming the next Permal or FRM.
The firm that I'm looking to work for has about 18 managers on their books. The most prominent manager they have on their books (and therefore a manager I would be raising assets for) is the most visible in the market in its strategy (which is a desirable strategy at the moment) and also the largest and most well known. The head of the firm has already raised about $600mm for them this year. I'd be coming in and covering a region where the firm has no coverage (Asia Pacific).
I'm just wondering that given I don't have too many contacts but have no doubt that I can build them up and given my age I think I have time to do this (it seems that most of the guys that do raise money for hedge funds are significantly older so I'm thinking that if I start when I'm young then by the time I'm their age I can be killing it). At the end of the day I just want to make good money and enjoy what I'm doing and this seems like something I might enjoy.
Any advice / comments anyone could give me would be appreciated. This thread sort of started out about third party marketing in general and then sort of morphed into my own career path but thought I'd just see if anyone could give me some insight into the career path and what they think of it in general.
interested
but tbh, i think that your numbers are exaggerated
I think most of your post is pretty on point except assuming that you can raise $200 million per year. You need a well established relationship base to do that.
Also, yes a lot of people move into it from cap mkts because they prefer the annuity to transaction business. Some firms are able to get paid in perpetuity, but that isn't that common. I think a 3-5 year trail down on a revenue share is more common.
Personally, I'm of the belief that if you have an aptitude for sales, it is one of the best careers on wall street.
Another concern would be that your fund goes under. You potentially lose the customers that have placed their trust in you, and possibly even giving yourself a bad rep. Won't this make it even harder to raise funds in the future?
Nice research adast027. I'm still undergraduate but i'm looking for a way to break into this business as well. The work seems very interesting and the lifestyle good.
Win - most of the firms I've been given the opportunity to market have long track records (most since the 90's and a couple since the early to mid 90's). All have at least $700m in AUM so they're all high quality managers.
I guess the next thing I'm wondering what the exit ops are. This seems like a destination type career rather than a stop along the way.
I am one, my recommendation is only do it if you have stay in power of a minimum of 3 years. Factor in time it takes to build relationships, get fund manager in front of investors, cycle time for investor to do on sites, paperwork, due diligence, then if you are fortunate enough to make things click payouts take time to collect on and performance comes at the end. Make sure you have at least 250,000 to burn on legal, travel, personal as most of that is taken on the chin for the first few years. Also factor in set up time to affiliate with a Broker Dealer (if one takes you with no sales side experience and relationships in place), getting licenses, blue sky, contracts in place with manager etc. Last thing is funds that large are usually covered very well by other 3PM's, cap intro teams, in house marketers, RIA's, consultants and other general sources (especially when they are top performers, have long track records and solid teams/infrastructure) in which case they don't need you nor do they want you given these fees (which are accurate btw. Last thing is managers are reluctant to work with marketers with no track record, experience or relationships in place, so getting these guys to sign on with you isn't going to be an easy feat. That said, it's not impossible, but it isn't easy either. It's taken me 4 years to raise my first 80m, working my ass off and losing my shirt in the process. Looking back, I think going in house somewhere and building a rolodex and learning on their dime and graduating on is a better path; but no regrets, so go for it if you are relentless and consider all of the above. Good luck.
Hedge fund sales/marketing positions (Originally Posted: 07/28/2012)
I can't seem to find any info about this beyond the actual job postings themselves.
Any information on hedge fund/fund of fund sales and marketing positions? Ie, how does one get in, are you making top dollar, are there entry level positions or do you have to work at a marketing firm or a fund as an analyst first...basic stuff like that. Any info? Doesn't seem to be much on this topic.
i don't have much personal experience, but it seems what you are talking about is investor relations. I doubt small-medium hedge funds have any entry level investor relations programs, but i can only conclude that a position in sales at a BB may be a precursor to working at a hedge fund in investor relations
The fund I used to work at recruited IR/marketing people out of investment banking positions. Pay was about 90-100K as far as I know
There is a big difference between IR and Marketing positions, although the teams are often joined, particularly in smaller funds. IR positions are cost centres, tend to be pretty dull work and have lower pay. Marketing positions are focused on raising assets, the work tends to be more interesting and will include pitching to investors. The pay is far higher and tends to be linked to the assets you raise, a marketing director at a large fund can take home $1m in a good year and there is the option to set up, after a while, as a 3rd party marketer, some of who do very well indeed. It is possible to land graduate roles for both, although it helps to be a good looking girl. Some funds will offer internships, and that is probably your best route in, you should take a look on albourne village, they tend to have a few junior marketing positions and internships posted.
I'm interested in this, too. What are the usual (or the best) routes to become a hedge fund marketer?? Equity / fixed income sales??
Get an internship in a hedge fund marketing role, do well, get an ft offer. That is your route.
Excepted that most HF don't have internship, even for more common position (research,...) so how do you do ? HF is not banking.
How do you become a Hedge Fund Marketer (Career Route)? (Originally Posted: 08/13/2012)
You all are experts. Please enlighten me.
To become a trader at a HF, the best route is usually to start as a trader at an investment bank (I might be wrong).
To become an analyst or portfolio manager at a HF, the best route is usually to start from IBD or ER.
Then what is the best route to become a HF marketer? When I say marketer, I mean the front office HF person that raises the fund via potential clients, not the investor relationship manager who just manages the existing client relationship.
Please stop it with these threads.
What are wrong with these threads?
Be a hot girl from Harvard/Yale/Princeton/Stanford.
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
Start your own HF
Cook sausage in the most expensive parts of NY and Kuneticut
And be patient enough to wash the dishes
HF marketing is pretty much a sales position, so i presume a sales job before this would be good? Perhaps a sales position in investments?
You could do this from any position where you could develop these relationships. It could be working as a consultant, working as a junior to a senior marketer, and other things if you are creative. You just need to develop relationships and establish credibility.
You can do this as someone who works within the fund or is a third party marketer. For newer funds, you can take them on as a client as a third party marketer and get something in the neighborhood of 20% of mgt fees and carry in perpetuity for every client you bring to the table. Needless to say, you can make a lot of money doing this.
Obviously, few funds will hire you as a senior marketer internally or as a third party marketer without an extensive and established network.
Thank you all. Thank you SirTradesalot. You guys have been very helpful.
anymore advice?
Know alot of rich people who or get in with someone who does.
HF Marketing (Originally Posted: 01/24/2013)
What does everyone think about this sector of the industry? Did the new SEC rules for HF regulation positively impact job creation? I'm an NYC-based college student interested in pursuing HF marketing as a career and wanted to get everyone's thoughts. Thanks.
Are you a woman? If so, go for it. If not, start somewhere else, build up a network and then move into the space once you can add some value.
Thanks for your input. Yes, I am a woman. Is this field female dominant? I've read that the IR/Marketing sectors of the industry are primarily female, but I'm not totally sure. What is your experience with this field?
The JOBs ACT to my knowledge has not exactly 'changed' things yet. However I think it will inevitably lead to greater growth in HF marketing/advertising to retail investors. The convergence of Alternative and Regular investments (40 ACT funds & Hedge Funds, etc) is really blurring the lines for the investor. Which means differentiation is ever more important.
Yes, it is very much dominated by females. You'll most often only find the males in executive IR roles in which they have been there for awhile (since the 90s). You need to be easy on the eyes, pleasant at ALL times even when you're in a horrible mood, sociable, funny, and quick on your feet. Most of these women are very witty and form a huge business network of people they know. Attending networking events and HF fundraisers 2-3x wk is not uncommon. You'll be taught to be a LinkedIn Pirana. Most importantly, you'll have to be delicate with investors and know the ins and outs of the do's and don'ts with these high net-worth clients.
Best of luck. Can be a fun career, but very challenging right now. Raising assets is the #1 challenge for emerging managers.
Marketing Positions for HF (Originally Posted: 01/29/2018)
Is it true HF marketing is mostly female dominated and that males don't have as much as a chance? This is a career that would interest me, and I would be looking to raise cap.
Probably about an 80:20 split in my experience
Edit: following up on this, I can count meeting 8 female marketers and 4 male - most of the female marketers worked in larger HFs. Still, the majority of people I have met who are marketing funds are CIO/CEO/COOs or partners rather than just marketing professionals. im not sure about the split for PB Cap Intro but I have never heard of a bias there.
you currently do marketing/sales work? or previously?
HF IR/Marketing hiring: a case study in shamelessness (Originally Posted: 07/12/2011)
Got curious and perused HF roles in the market, I usually have them sent to me in batch and in my usual batch of HF Associate/Analyst/Jr.PMs postings was hidden an IR/Marketing role. Hilarious. I laughed hard @ the quantitative qualifications required and the SHAMELESS up-sell of this position to ex IB/PE/HF guys. Wow.
Like this isn't 2008 dude you're not going to get PhDs and/or ex IB guys on your IR/marketing desk ok?
why not? Isn't IR very useful when you want to launch your own fund sometime in the future and you already have a good P&L track record but don't know any/can't get any investors? Or is IR completely useless?
Out of curiosity, where can you sign up for those batches of HF associate Postings?
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