LO to MM HF?
Hi, I would appreciate some advice from the members of this forum please.
I am a senior analyst at large LO. I have good performance and am on a good track.
I have a question - would you leave this role to work in a top MM HF as an analyst with a carve-out book? A few things on my mind -
- Is comp high enough at MM to justify the move?
- Path to PM. PM at MM HF seems like a great job as you can effectively run your own business that you cannot do in a LO. But I am not sure how long it would take to get to this position, and what MM HF PMs typically make.
Personally, no, I wouldn't. Risk-adjusted compensation as a LO PM is way higher. Longevity in the seat is the most important variable in my opinion. Yeah, you could kill it at a MM and make $M more, but to do that year-in and year-out is not sustainable.
Risk-adjusted, lifestyle-adjusted, longevity-adjusted.
facts
I would stay, but I think the right answer is it depends (on other factors like life outside of work, goal, career expectations etc). Something to keep in mind is that the MM option will always be there for someone like you, but the LO option won't be once you leave. Are you able to negotiate some sort of guarantee?
Thanks for your feedback.
Agreed. Still seen 7-fig guarantees to senior people. It's not much in grand scheme of things but it's not nothing
Guarantees are absolutely a thing for the Citadels and Milleniums of the world. Especially if you’re running a carve out book. A buddy from my fund got a 7 figure guarantee for 2 years and p&l linkage of course to go to a citadel pod. About the same experience level as you.
Do NOT leave this LO job without a great guarantee. Also - why do people say you can’t go back to doing Long Only? I know plenty of folks (ok maybe only a few) that did L/S and then went back to LO, especially with prior experience.
Dont do it. Most likely your alphas are not suited for the MM framework. You are in a good seat, I would sit tight.
Thats a good point
Much easier to move from a top LO to a top MM HF than the other way around.
Holy shit 7 YOE at an LO and you're at nearly $1m all-in? That's awesome, congrats on being a killer. I don't know why you'd want to leave, one of my best friends is a senior guy in a large pod at a top MM and he's been saying he wants to move to your side. The stress and constant trading around positions to manage your risk limits vs the steady pace of an LO just seems like a weird trade off considering how sporadic the comp can be. Plus one bad move is enough to get you axed unless you're truly a top performer the rest of the time. There's still a ton of bureaucracy at MMs having to deal with compliance and risk management, how bad is it an an LO? Is it more culture-oriented bureaucracy vs operational?
Thanks. Thats a good point on bureaucracy with compliance and risk mgmt at MM.
Bureaucracy in LO is more culture and marketing based.
OP, which assets are you investing in? Equities only or do you have a wider mandate?
Equities only
Didn't see your title my bad.
I think at least half of pod analysts would rather trade spots/career optionality for you for the reasons everyone else outlined.
You're in a great role - for the benefit of everyone else, what's AUM/city? Is it one of the big ones (Wellington/putnam/fidelity/etc)?
Thanks!
Its a big LO but prefer not to say more here.
If you have the time- could you write a little more about your frustrations at your current job? I know you mention bureaucracy and less pure focus on making money, but would be really helpful to see that further fleshed out. Curious because I am thinking of making the switch from PE to AM or HF post MBA and was leaning AM. Relatedly, are these frustrations definitely regarding the LO industry in general or could they be specific to your firm? One of my mentors' advice was that if you can get an analyst gig at one of the private partnerships (he called out Capital and Wellington specifically), take it over pretty much any other public markets gig. Otherwise decision may become a little trickier.
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I'm a lot more junior than you, so won't be able to give any advice, but I get what you're saying in all of these points.
My large LO sounds a lot like yours. ESG and private have become a huge focus for us in recent years, and it seems like that sort of thing will be here to stay. The real investors remain skeptical, but our CEO says otherwise (he's a legit genius tho especially for investing). Additionally, the bureaucracy of Large LOs sucks. It definitely takes away from the investment qualities and all, but I think the work life balance and incredible corporate culture is probably a good thing in my mind.
On the point of asset gathering, it's true. Larger LOs with time will become more focused on gathering funds to push fees down to compete with passive. Nonetheless, I'm fairly sure that at least where I work, investments is the central focus of the firm. But it really is a lot like working for any F500 company in a sense.
Curious about your general thoughts on the space as well, having just started in it myself.
Yah no reason to leave without a major guarantee and the ability to really scale up. Also some people's personalities work more in MM but does not seem like a good "trade-off" here.
Would not make the move here
This was a pure flex post
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High quality post in my opinion. I'd be interested in a AMA or a separate post of how you got to where you are and any advice to juniors (research associate) on moving up the ranks at a LO. Quality LO posts are few and far between but I think there'd be quite a few people interested, including myself.
Would love to pick your brain as it sounds like we’re at similar firms and I want to be in your position in a few years.
Would love to also pick your brain on more pros and cons of a large LO seat. Currently an analyst at a small boutique LO and can't help but wondering if the grass is greener at the larger firms with more research resources and better comp. Not sure if I could handle the bureaucracy though as I enjoy my small team. Did you start at a large firm or have you worked at a smaller firm also? Any comparison would be great if possible.
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From an outsiders’ POV, it seems a senseless move on all fronts bar money.
I would ask - what do you really want? You’re (I’m guessing) 30 y/o, making 800k with hours most people on here would die for, and have good trajectory. Assuming you don’t live in New York, why move? If money is your #1 objective above literally everything else then fine. Otherwise, I’d consider your life stage and if taking on more stress for a pay bump.
I’m a bit more jr at an LO, debating the same thing as $ is light vs industry. There’s a small chance I know who you are if we are at the same shop. Let’s think through. In life you solve for 1) learning opportunities / investing acumen, 2) making money, 3) stability/lifestyle. All of those things have a $ value attached to them. Seems like you are set on the first one. 2) money light vs industry for value you provide, ok that’s quantifiable. 3) stability and lifestyle is great and you won’t know what you are missing until it’s gone. The math is simple no? Quantify the lifestyle discount you are willing to take and then apply a probability to the durability of the cash flow stream over a 3 year period and compare expected values. If once you are comparing you feel a gut reaction either way, you’ll know
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