Is nowadays a PhD compulsory to break into HFs?

BrianHunter's picture
Rank: Neanderthal | 2,837

Everyday I see tons of people at HFs or large prop shops that have PhDs.

Even at my desk (t3 bank think SocGen UniCredit Commerzbank ING) 2 out of 3 quant trader/strat have PhDs

Given my dream is to break into HFs I was wondering if is worth it to concentrate in this path instead of continuining with banks

About me:
I did a bachelor in finance in a non target Uni (still strong in the region), master in London at a semi and few finance experience (S&T and CF)
Might a PhD in a top uni in a field like financial econometric/financial math/finance give me an edge to break into HF?
Unis like Cambridge /Oxford have HFs like Cantab or MAN behind them.. same I think in the US

I am specialised in volatility and EQD as well as crude trading. I am implementing my algo strategy with Python on crude markets and could prove a decent track record


Comments (9)

Sep 13, 2019

I think a PhD is less useful than it used to be. Many firms used to require PhDs but now hire strong undergraduates as well. It will help in getting an interview but they care only about leetcode/probability and not your research or expertise. The work is all standard and commoditized now, unless you are bringing in a live strategy from another firm (not one you ran on your own account). Some managers like the degree since they have it themselves and got in at a time when it was valued, but it's not necessary or sufficient to get a job today, much like the MBA or CFA.

Sep 13, 2019

You don't need a PhD, but you do need to be the best of the best among other undergrad peers. Having a PhD is one indicator for that.

Sep 13, 2019

I do have a BSc and a MSc, other than IB experience in a quant role

Though, no fancy names.. bsc uni is a top 10 but in my country only, MSc uni in London is a good semi but still...

Sep 13, 2019

I have a PhD. I think it helped me get my current front office buy side role in options trading. I sort of lucked into it. I don't think getting a PhD simply to go to a hedge fund is a good idea at all. There are just too many things which can go wrong for your master plan to work out the way you think it will. For example:

  1. What if you fail quals? You're kicked out of your program.
  2. What if your department finds out you want to abandon academia and decides to kick you out or deny your opt as an international student
  3. What if your advisor fails tenure review Midway through your dissertation?
  4. What if you have conflicts with your advisor and it takes 8 years to graduate?
  5. What if you run out of funding?
    These things have happened to every starry eyed first year PhD student. Don't think it won't happen to you. You need to plan for contingencies.

Finally if you do want a job on the buy side with your PhD keep the following in mind

  1. You're pricing yourself out of many jobs but you don't have the experience for the jobs which would pay you a salary which justifies your education
  2. Employers want guys who can contribute on day 1 with very little training, not just some really smart dude. You have very little idea how a trading job functions coming straight from school or what techniques work in the real world vs on paper.
  3. You have to be doing research on something cutting edge and close to what the fund is working on. It's not necessary to have a degree from a top 10 school to work on the buy side (sell side is a totally different story). I have a friend with a pure math PhD from Harvard who has been unemployed for 1 year after graduation. I have a colleague at work who did his PhD at a school whose name sounds like one of those for profit universities. One did work on applied high dimensional portfolio optimization and the other guy worked on developing a new kind of stochastic integration. Which one do you think has a buy side role?
  4. If you want to maximize your chances, do internships at other hedge funds and always publish in heavily applied journals on a subject you think practitioners will actually care about.
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Sep 17, 2019

that's very helpful..thanks for sharing. really makes me think of what to do

Sep 17, 2019

I was told when I considered a PhD in Economics that you really have to love what you do, love the field, and WANT to do it to give back to academia since for years you'll be making next to nothing, doing research.

It seems like PhD's self select into HF, not the other way around.

Sep 16, 2019

I think a Ph.D. can be helpful but don't believe you need it. If that strategy you're running is being used to manage one of bank's books, then it's likely more relevant than a Ph.D.. to front office trading.

Sep 17, 2019

I don't think they will ever allow me to use the strategy.. is also quite complex for me to implement with real money for compliance restriction on trading dictate from the bank

Sep 17, 2019