How Transferable are Skills Working at a Hedge Fund
I am a Sophomore in college doing extremely well at a top target school and will have the opportunity to start my career at a hedge fund. I just went to AQR Early Engagement days and really liked the people and the day to day work of the quantitive researchers seemed very interesting. My only concern is a can't imagine spending a career working in finance as I have entrepreneurial ambitions. My thought is that working at top hedge fund will give me more credibility, financial security, and technical skills for the future. However, I'm afraid working at a HF won't give me as much transferable knowledge than if I worked as a consultant. How accurate is this? My current impression is that people tend to stay in the HF sector they're entire careers, but do people leave to start their own tech firm (not start their own HF shop). Can you share Linkedins?
In summary:
I think I would enjoy working at a hedge fund more (both culture and work) but I think the skills working as a consultant (more data driven role) would be more conducive to my long term goals.
It depends on what you want to do. Working at a fundamental shop will give you certain skills that a quantitative shop won't and vice versa. Jeff Bezos started at a Hedge Fund (D.E. Shaw) before starting Amazon.
I think if you speak to people at AQR the general consensus is that the day to day work is actually very boring and repetitive. From an entrepreneurial perspective I don’t think it’s any worse than going to tech though, and probably better than most consulting roles.
For what it’s worth, AQR and it’s peers are far from guaranteed even for M&T students doing “extremely well.”
I think if you are trying to start a tech firm, you are far better off working at AQR (or a quant fund) over consulting. You will spend more time writing code at a quant firm and working on solving technical problems, while also developing an understanding of markets- especially at funds like AQR that stress systematic fundamental strategies. You will also be making more money, and hopefully saving more too, to finance future entrepreneurial ventures.
Would also pick the HF you decide to join (if you have a choice) carefully. AQR and Point72 are some of the riskier firms to join today, but may potentially offer more upside for it.
Curious what makes those firms riskier in your view?
Both have had rocky performance at crucial times as of late, and it is unclear if they will be able to generate sustainable alpha going forward.
I know nothing about AQR, but Point72 is just a multi-manager. Not sure how you can determine their future path to alpha unless you think their ability to allocate to PMs is systematically flawed. If you are talking about their quant fund (I think it's called Cubist) since you're comparing it to AQR then it would make sense.
Yeah, it's their ability to allocate to PMs. It is unclear if they will be able to: '
(1) Hire top talent away from other opportunities (other multi-manager platforms, single funds, etc.) given their prior reputational damage. (2) Utilize their platform to add value to PMs/analysts in a way that is proportional to its costs. Citadel/Millennium have a better proven model in this aspect. Point72 seems to be pouring a lot of money into "big data", although whether it will generate meaningful edge is yet to be seen.
LPs are likely to overweight recent performance to determine whether the hurdles in (1) and (2) have been overcome.
In either case, it doesn't mean Point72 is necessarily better or worse to join than other platforms. They seem to be making above market offers to attract talent, and the owners of the other platforms are shrewd with regards to retaining the value they are creating for their PMs.
Isn’t aqr in a lot of lower fee products? They could die as a hedge fund but survive as a huge asset gatherer potentially.
AQR is mostly doing very traditional risk premia. This is overcrowded and will continue to underperform in my opinion. The emphasis here is marketing. Jobs tend to be fairly stable and work life balance good compared to other hedge funds.
Point72/cubist is multi strat and their teams likely wont get away with just running risk premia strategies that everyone knows. If you join the right team the upside can be pretty good but of course your PM might blow up after a year and you are out.
I work at a fund in a similar space. These seem like very different paths (consulting vs quant fund) to me. I struggle to see how you imagine that consulting is "more data driven" than a role at a quantitative fund... literally all AQR does is data based work assuming you are not talking about going into business development, and the technical work is going to be at a much higher level than that of a generalist consulting model. That said if you are worried about transferability, a quant research spot at AQR is definitely not as transferable as strategy consulting. If you are a rock star coder/data scientist etc there will be tons of opportunities in that space to be sure, but consulting opens up many more doors for broader management/strategic roles in a wide variety of industries.
Depends on what you intend to transfer into. For tech roles, quant finance is very transferrable (b/c you're developing the technical skills) and I know a bunch of people that have gone from being quants to working in tech (mostly as developers, but anyone with entrepreneurial drive can start their own co).
As far as consulting, I actually view it as not a real skillset. There is nothing differentiated about what you learn in that field.
AQR is a giant mutual fund manager in which you will be a tiny cog with little responsibility/autonomy.. not a great place to learn IMO
Consulting is a bad place to learn real technical skills.
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