How stressful is it to work at a HF

I know working at a HF can be very stressful especially with the amount of emphasis put on your performance, but was there a time you were like "fuck, i'm gonna get fired" moment? Like what is the stress like if you can describe it

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Comments (13)

  • NA in IB-M&A
Jun 3, 2021 - 2:59pm

Didnt happen to me but there was a PM at the AM Im interning at who after 4 years of underperforming got moved to business dev. Not an answer to your question but at least there is a 'stop loss' if things go south as opposed to what you can read on this forum about exits not existing in this field.

  • Investment Manager in HF - Other
Jun 3, 2021 - 3:26pm

It's going to depend on the fund. MM pods are pretty high stress. Many multi managers have strict limits and rules, so you know if you are screwed (getting close to drawdown limit, months/years of not hitting performance, etc) and getting fired is mostly a direct result of those rules. So at least there is clarity, and it may not be directly related to your performance (PM and whole team get fired). At SM funds the stress is there, but I would say it's a bit different. There you are worried about your fund underperforming, whether your clients will stick with you, etc. While individual performance definitely matters, you are less concerned about smaller drawdowns, etc, (relative to MM) and more about larger shifts in AUM (and of course if you aren't good at your job). If you are good at your job but you have a drawdown you shouldn't be at risk (of course depends on how much buffer the fund has on finances), but measuring "good" can at times be tough if you don't have direct PnL tied to you. 

I haven't really been worried about getting fired, but have had many years of worrying about how my income will fluctuate. As an example my income was +120% one year then -30% from there the next year (and this was after the more junior years)

Jun 3, 2021 - 3:34pm

thanks for the insight! I saw you're an investment manager at a HF, so what are your thoughts on working in investment management at a custodial bank (think State Street and BNY) as a junior right of out undergrad? Are the skills of the job related to what you would do at a HF because I would want to exit into a HF at one point in time. 

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  • Investment Manager in HF - Other
Jun 3, 2021 - 3:57pm

I know less about the work at custodial banks - what would you be doing?

My title isn't the most accurate, I just use it as a general title. I work on the investment side of a HF (I.e. research trading ideas, etc) and have been in this space for a while (over a decade now). 

From the few people I know who worked at places like state street, it'll really depend on what you do, but a lot of them are more in the space of fund accounting ("back office" - I hate that term, but just saying not making investment decisions). So it just depends on what your job will be.  I think being in IB or S&T (or any job with more direct markets research/experience) would be more useful. It'll also depend on what type of HF you are interested in (as the background for quant vs L/S vs activist is pretty different). 

Jun 3, 2021 - 3:46pm

It's stressful, but experience really varies depends on PM, who sets the culture. Generally, as said above, MM pods are high stress, regardless of whether you have a great PM or an a-hole PM. 

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  • PM in HF - Other
Jun 3, 2021 - 10:47pm

Truly are never 100% covered. Also as the other poster explained the "-30%" year sure feels like you are going to be fired. Not that you will actually be let go but you just feel mentally so beaten for a while. Then again the 120% mentally beat yourself up "why didnt I put on more size, why didnt I explain the process to risk better, what if this was the main year for sector and I just lost it?". The day when the books are closed and you basically know your payout the stress totally comes off but 3 weeks from now its all over again.

You either enjoy that kind environment or stress...or you figure out its not for you after all. The MM model is totally true all the guys who run those firms basically live off stress...soley being ahead of the curve and performance.

Now lastly, if you ever do hit the "holy eff, I am going to get canned moment" most people go down with the ship thats exactly why MM have the strict rules/limits. I mean if you knew your position is a bad one and gonna wipe you out hard you would have cut it yourself, if you are so vindicated in something (aka GME short) and near dead you might as well ride it out till they fire you anyways. Hence why even in the "GME case" I would be shocked they directly let go of some people even the guys who run those firms know that does not happen everyday.

Jun 4, 2021 - 1:46am

Can attest to the MM stress anecdotally as I had two well-performing friends at Aptigon when citadel decided to flick the switch and shut the whole thing down. There is a non-performance related stress which can grow on you say if you're a high performer but your pod overall is down, then there's a chance they scratch that whole strategy / coverage if it isn't working out.

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