Longevity of Hedge Fund analyst career?
Any thoughts on how sustainable an analyst career at HF is given the many headwinds? (commodity skill sets, industry overcrowding, consolidation, too much capital, shift to passive, growth of algo trading, etc.) Do most people do 5-10 years stint and then leave for other pastures?
You're concerns are legitimate given the many pressures the industry is under right now, but I would argue that much of this is cyclical. To address your concern of passive growth: there is a finite amount of capital that can flow into passive before the market gets so absurdly mis-priced and hedge funds start exploiting these inefficiencies to the fullest extent.
Algo trading is only as good as the edge that it possesses. Similar to your concern of industry overcrowding, algo HFs can get just as overcrowded in the future as well. This does not mean that algo HFs won't be the ones raking in the biggest returns in the near future- they very well can- but I don't believe that algo HFs will cause an alleviation of human managed funds. What I do see happening though is human managed funds incorporating more computer based analysis and getting more into big data, but not going away altogether.
On top of that, fees will go down. 2/20 will be a thing for the big name managers but the smaller funds who don't have as great of a track record could be looking at 1/10.
With regards to your question about leaving HF after 5-10 years, I am not sure about that so can't really answer that.
I do wish it was the old days 30 years ago where guys just stumbled into the industry and it wasn’t the trillion dollar industry it is today. Far more interesting people then. And less competition.
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