Long Term Career in Hedge Funds

Jeremy1989's picture
Rank: Chimp | 3

I work in private equity and have gotten an offer to move over to a prominent long/short equity multimanager hedge fund.

I know that I would enjoy the job itself but I'm very worried about getting laid off. The industry seems brutal and there have been tons of firings in the news due to fund closures and bad performance - Perry Capital, Visium, Surveyor, etc.

I'm sure the people who got canned were insanely smart guys but there were circumstances outside of their control that led to them getting let go. Am I smarter or could I be a better investor than those guys? I have no idea - probably not.

It seems every other story in Bloomberg and WSJ is about how hedge funds don't beat the market, how everyone should just index, and how fees are coming down in the HF industry due to underperformance. Even Julian Robertson recently lamented that "It's been a long time since I thought I was in the right business."

I've also heard PMs say that the industry has gotten dramatically more competitive over the past decade and that it's harder and harder to make money, especially with the quants now in the game and firms that focus on trying to squeeze out shorts.

From those of you who are actually in the industry, would you recommend going into it right now? Would a different strategy than long/short be better positioned for a long term career?

And what do those who get laid off do afterwards? I imagine the resume gap can be tough to explain unless the firm went out of business.

Comments (31)

Best Response
Oct 5, 2016

First question is do you like PE? If there wasn't this uncertainty around the industry, would you have immediately accepted your offer?

I'm a couple years in, but the time I've been @ a L/S equity fund has definitely had its ups and downs. I'm learning a lot, getting to do what I want, have more flexible hours, and really don't think I have taken a paycut relative to PE / IBD had I stayed. I'm biased so I guess I'm looking at my career development + decent comp in a rough patch and remain optimistic that HF's will outperform in a more normalized rate environment. As a junior, you wouldn't have nearly as much comp volatility relative to the senior guys.

Re: firing. My friend was let go at one of the firms you mentioned (junior person). Had 2-3 months off and now starting up at another fund.

I would be lying if I told you that I didn't have the same concerns, but I guess I'm trying to take the 5+ year view here.

    • 3
Oct 7, 2016

Yes, if there weren't the current industry uncertainty or the risk of layoffs, then I would have immediately accepted.

Did you move over from PE? And if so, what do you like better and what do you like less?

Are you in constant fear of losing your job or do you feel secure in your seat?

Oct 23, 2016

No one in this industry should feel secure with the exception of the electronic trading guys.

Oct 25, 2016

I'm about to join a large multi-strat firm from a more stable seat, and I like to think of it as a 'high risk/high reward' move. This industry is at, what I believe, its nadir from both a public perception and a performance perspective. Volatility, both in job security and compensation is a given in the HF industry right now. If you're a young person willing to make a calculated bet, it's not a bad place to be.

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Oct 25, 2016

but you don't seem to know anything about the industry so you should start there

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Oct 25, 2016

you're asking for too much. stop being lazy and do some research. In the mean time go over to forum topics, click on rank, and click on the second topic.

KICKIN ASS AND TAKING NAMES

Oct 25, 2016

Go read the book All About Hedge Funds. It will teach you everything you want to know. It's a pretty quick read too, only took me 2 days

Oct 25, 2016

get off the coke bud.....slow it downnn

    • 1
Oct 25, 2016

You want to know what a Hedge Fund Career consists of, What positions exist within hedge funds and their requirements, Salary expectations, Hedge Fund statistics, etc.....

Let me point you into the right direction http://www.google.com

Oct 25, 2016

funny timing...we just released a new publication called Hedge Fund Career Guide (literally today).

I think this is what you're looking for... http://www.wallstreetoasis.com/guide/hedge-fund-ca...
Good luck,
Patrick

Oct 25, 2016

If this question is representative of your "research" abilities, then you're really going to struggle at your new job...

Oct 25, 2016
sk8247365:

Can someone just sum it all up for me? I just got into ER but I am always planning my next move. I am thinking PE, HF, or VC

lol ..

Oct 25, 2016

Just wondering if someone could just give me a quick answer. I do not want to spend hours researching this at this point and thought maybe someone could spend one minute writing something up. Guess not....

Oct 25, 2016

just download it to your brain like the matrix... thats how i learned mandarin...

Oct 25, 2016

Money cash hoes

Oct 25, 2016
Oct 25, 2016

I'm very grateful that I will be competing in the job market with this guy!

Learn More

814 questions across 165 hedge funds. 10+ Sample Pitches (Short and Long) with Template Files. The WSO Hedge Fund Interview Prep Course has everything you'll ever need to land the most coveted jobs on the buyside. Learn more.

Oct 25, 2016

Read this site and all your questions will be answered... wish i could do a -1 for being lazy and not searching for your answers first

Oct 25, 2016

"...all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."

  • Schopenhauer
Oct 25, 2016

I don't have a response - curious to hear what others have to say.

Oct 25, 2016

It sounds like you may be very junior, maybe even first real full-time experience? If so, this is all a lot harder to answer as the training / mentorship are a lot more important. "Hedge fund" is great on a resume, but the skills aren't as transferable in a lot of situations (and many HR managers won't have a real clue as to what you do).

$1B to $2B AUM is well beyond the small/risky fund stage, so you should have some comfort there. HF industry is inherently volatile, so you could be A+ player and still get laid off if the fund overall performs poorly.

Pigeon holed - no, there is a lot of opportunity for lateral movement within similar strategies and a lot of recruiters who are looking to make big fees by helping you move around. Yes, it would be difficult to do distressed debt for a bunch of years, then move to equity L/S.

5, 10, 15 years - all would be a long stint at one fund. It certainly happens, but 10 or 15 years in, you are likely running money.

Upward mobility - can be tough to judge up front. You need to understand how the firm was built. If it's a multi-manager fund, then you'll generally find a lot more opportunities to move up. If it is a single manager fund, that PM may never want to relax control over decision making. The PM may retire in 10 years and shut down the fund rather than step aside and let someone else run the show.

Oct 25, 2016

Thanks! This was very helpful.

Yeah, first real full time experience. It's a multi-manager fund and one of the PMs doesn't seem like he is leaving any time soon. Leaning heavily towards the fund, but wanted to get some sense of the way things look down the line before I jumped.

Oct 25, 2016

2bn dollar hedge fund vs. accounting or consulting?? take the damn gig

    • 1
Oct 25, 2016
GBB_19NHS:

2bn dollar hedge fund vs. accounting or consulting?? take the damn gig

I can't believe someone is really questioning this. Go for the HF.

And @archervice is correct. No one gets laid when they say they're an accountant or an engineer unless the counter party is also an accountant or engineer. And no on really wants to fuck an accountant or engineer. You should never make career decisions based on anything other than your job's ability to get you laid. :)

Even if you get pidgeonholed in distressed/special situations, there are a fair amount of funds out there with these types of strategies so if things went poorly at the fund or you personally performed well, you'd have a decent amount of options available.

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Oct 25, 2016
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Oct 25, 2016