Moving from Hedge Fund of Funds into a Hedge Fund

Hi all,

I was just wondering if anyone is aware of the opportunity to move from a hedge fund of funds as an analyst into an investment analyst at a hedge fund? Obviously I am doing now modeling in the fund of funds so I was just wondering what the move would look like.

Thanks

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Comments (13)

Most Helpful
  • Investment Manager in HF - Other
Jun 14, 2020 - 11:44am

It is possible, but hard to do. The job is very different, it depends on what you are doing at the fund of funds and how you can "sell" your skills.

At a HF you are making investment decisions, you have control over what strategy you implement, how to change this, how much risk, how to develop new ideas and understanding where your ideas went wrong, etc. Essentially you have that level of control and responsibility.

At a FoF in general you are finding these HFs, getting the relationships and agreements in place and trying to decide how to allocate to them (and who to allocate to), but in a way you are doing it with such limited understanding. How are you deciding to invest in X quant fund where you sort of understand what is going on but don't really have the understanding. Do you just invest in the larger players? You are picking and choosing with some insight but in general the sell is a lot more about getting access to these funds and "picking" the good ones than anything else.

You will need to be able to sell what you are doing. Talking about how in depth you get to know different strategies, etc. You will also have to be able to discuss your modeling at a level that may be hard to do depending on your actual role.

What do you actually do and what is your exposure to the markets/modeling/etc?

  • Prospect in HF - Other
Jun 14, 2020 - 3:23pm

Thanks for this, that's a really helpful breakdown. I am currently not doing any modelling or individual security analysis, so I agree, I think it could be pretty hard to break into a hedge fund if I stay in the industry for a year or two. Would you mind PMing me so I can ask you a question about this?

Thanks!

  • Analyst 2 in HF - EquityHedge
Jun 14, 2020 - 3:51pm

It's possible. Not common but doable. Need to build connections with the right people and able to sell yourself well.

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Jun 14, 2020 - 4:11pm
yahoo:

I've seen people make the transition from HFoF to Investor Relations / Business Development at a Hedge Fund. As other people have said, the skill sets are pretty different, but IR/BD tends to be the most overlap.

This. (and the post above that one)

But there are exceptions. I know I was an allocator before making the HF jump though it was not easy, took forever and I had to take a step back in my career. I know of at least 1-2 others who have done it as well and have thrived.

OP you will just probably need to kiss a lot of frogs to find the right person, take some risks and frankly, get a break. Depends on the kind of HF you are trying to get into but if the team knows you as a person well and you are willing to take a step back and grind it can be done. Probably will be at smaller funds/growing shops rather than anything name brand and more institutional. Like I have said many times, most funds don't perform that well (and you know this as an allocator), and none of this work is rocket science.

At a certain point you may wonder if it is all worth it. Learning stuff all over again, taking a step back etc, when you could make a ton more money doing IR (good IR people get paid and don't necessarily have to work hard - though many do). Good IR people are rare and once someone is found, they will be bid up bigtime.

The other thing you want to think about is: given the last decade and how the environment is for HFs, do you actually want to make that jump?

Feel free to PM for more

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
  • 3
  • Prospect in HF - Other
Jun 15, 2020 - 9:25am

Thanks for your in depth reply. I have tried to send you a PM but it won't allow me as I have reached my daily limit (which must be 1). But I would love to reach out to you tomorrow if you don't mind?

  • Research Associate in HF - Event
Jun 14, 2020 - 6:24pm

The only counterpoint I would make with an otherwise generally true advice above about "fund manager allocator" seats is that if you are in a secondary seat where they have a lot of direct/co-investment opportunities (i.e. you need to underwrite a direct PE biz with models / investment memos etc) that job more or less can be directly relevant to either PE or HF job (I have personal friends who've made jump to both out of secondaries).

So thinking about "two steps back", you clearly don't get anything out of evaluating whether a family office should invest in Tiger Global or Melvin Capital but if you can transition that role into a more direct/co-investment type of secondary role it wouldn't be unheard of to eventually leave that seat for a role that you are envisioning. I personally think going to a direct/co-inv secondary would also be a natural progression from your current job and would have to imagine also pays quite a bit more than pure FoF type shops.

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