Need help deciding which offer to pursue: boutique HF vs. BB vs. asset management

Long time lurker finally coming out of the shadow here. I promise now that I have officially made an account, I will openly contribute to the forum!

I currently have three options: to work for a boutique hedge fund w/ $100million aum, Asset Management w/ $4billion aum, and at a BB for its securities division.

I graduated from a Ivy league school this past May, and have recently just started looking for a job in the past week or so. I found the two of the three jobs by sending my resume directly using linkedin to reach out to MDs directly because I realized I had missed recruiting season by like six months... :/

Choice #1: BB - market making/flow trading; but with the prop desk gone thanks to the financial crisis, I'm not sure if this is a good idea

Choice #2: HF - analyst role, researching and advising macro themes for executable ideas

Choice #3: AM - assistant PM with pretty much guaranteed role to a PM in 2-3yrs.

Which of the three choices would put me in a position to start a hedge fund one day? Lets say in the next 10 to 12yrs?

Thank you.

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Comments (16)

Jul 11, 2012

I guess another appropriate question would be... could someone with a PM background at Asset Management move to the HF world as a PM?

Right now im leaning towards AM because the job would allow me to actually take discretionary positions unlike the other two.

Jul 11, 2012

Right now im leaning towards AM because the job would allow me to actually take discretionary positions unlike the other two.

Based on the information provided, I would do the same.

Jul 11, 2012

Seems like your outlook is a bit ambitious. Good luck whichever position you choose.

Jul 11, 2012

When you have three legit offers on the table, ask this question again. Unless, in one week, you somehow received three offers. In which case you are a god.

Jul 11, 2012

I appreciate the responses.
Vontropnats, I received two of the three offers in the last two weeks. I've had the AM offer for about a year now.

Here's a little background info about myself:

I fell in love with trading during my early high school years and have been trading for over six years now. The first two years of trading were done without any sense of clear strategy, just trying bunch of crap and executing crazy trading ideas. With a shit ton of luck, I turned the $6,000 I was given into $70,000 from 2006 to 2008 when the market was on its elevator ride up. But eventually, I over leveraged myself and busted the first trading account even before the volatility even hit the market later that year.

But during that two years, I literally experimented with all different kind of strategy and did the most riskiest thing you can think of, utilizing both risk-reversal options strats to taking insane amount of S&P futures positions maintaining just enough to cover margin requirement. The amount of leverage allowed and offered back then were insane.

After I busted my account, I took about a year to go through my entire trading logs and statements and analyze what I had done in those two years. And sort of refined my strats and weeded out stupid/poor tradings habits and learned a great deal about risk management. This is when I also realized that I had an edge in trading index equities and futures, exploiting volatility and global-macro concerns through sheer analysis of politics, macro economics, and investor sentiment (behavioral psych).

By the way, I think you really learn about risk management after you bust your account. No joke. Once you experience the nuclear destruction of your portfolio, you dont ever want to go through that again.

So late 2009, I got back trading the market but as a more matured trader than I was a year ago. I mostly focused my time on trading the SPY (and other index etf) and the futures (e-mini s&p and other currency futures). I moved away from trading individual stocks completely. Even in company stocks that I thought I had an edge in understanding the business and understood how the stock price behaved inside and out.

A year later as a junior, I noticed everyone of my peers going to recruiting sessions so I went to one or two info sessions and decided that BB wasnt for me and looked for other summer internships. I emailed couple places my resume and found an internship at a $4 billlion Asset Management here in new york and had a great time. I got to participate in weekly institutional client meetings (they even let me pitch ideas to the clients), fine tuned one of their $150 million portfolio without the PMs questioning every decision I had made...overall, the PMs were super cool, the guy who owned the firm really liked me as well.

When school started, they continued to let me manage some of their smaller portfolio ($3~$10million) as they thought a smaller portfolio size would allow me to have an easier time balancing between school work and work. They offered me a job at the end of summer last yr, but I kept telling them that it was premature to commit until graduation.

So.... I finally graduated and spent the last two months trading, traveling, catching up on reading, tv series, movies, and playing shit ton of video games (anyone here play company of heroes? just logged my first 100 online match this morning).

I've been in a rush to secure some kind of a job because I got a call from my parents that they will be no longer paying for my rent in nyc as of August, and that I better start looking for a job. because I goofed off enough for two months. But realizing that I had missed the entire recruiting season, I started networking via linkedin by buying their premium account.

By the way, Linkedin really works. Just search for your alums in the finance and investment industry and you get like 2000 results. Using that I was able to land a BB opportunity by sending the MD my resume and at the small hedge fund I mentioned earlier in the last two weeks.

Jul 11, 2012

I would also add that compensation at AM is lower than both BB and HF.

Jul 11, 2012

2 offers in 2 weeks...mind=blown

what type of HF are you wanting to run, global macro?

Jul 11, 2012

I'll take a swing at this one. First off congrats on the offers good job and you definitely seem to have a great background as well. Personally I would leave towards the AM of HF. Take first year's compensation out of the way because it is irrelevant your first few years anyways.


So the HF seems like a fantastic starting point to understand the inner workings of how a hedge fund operates and you have some serious upside potential. At a 100 million if the fund grows you can be in a fantastic opportunity to learn from your co workers since I assume it is a fund with less than 10 people. (I could be wrong) This gives you immediate exposure with the PMs and if your ideas are great you will be noticed quicker and have the possibility of making more money if the firm does well and possible moving around quicker ie more responsibility. But with all of this upside you also are taking on more risk and if the fund goes under in a few months you'll be out of a job. Also depending on what strategy it is should be factored in. If it is the same one you want to run one day then it is the obvious choice.

This seems like a fantastic role since I've rarely seen anyone shift to a PM that quickly and it gives you direct contact with the PM and allows you to make some discretionary positions and really help build your thought process. With 4 billion is probably a decent shop with less risk of blowing up and your positions will be much larger. This can be great to see what happens when you have to place large trades and see the process of unwinding them.

Even though this doesn't say much, I might lean a tad more towards the AM based on what you've said and the possibility of taking positions and working alongside a PM straight out of school. But if the HF is a similar strategy and gives you all of the positives I mentioned above, I'd probably take that. Hope this helps

Jul 11, 2012

I won't deal with market making as that's a different can of beans, but jumping from traditional Asset Management to hedge funds is very feasible. What really matters is the client base and institutional imperative of the traditional asset manager.

If you're at Ruane Cunniff and learning how to generate alpha, I don't think you're going to have any issues with moving over to a fund with a value-type strategy.

If you're at Closet-Index Wealth Management, it's probably a different story (APM or not).

Jul 11, 2012

Personally, I'd go with the HF.

Jul 13, 2012

so you turned 6k into 70k in two years in high school, ran 10m while an undergraduate, skipped recruiting to play video games and then stumbled into a couple of great job offers?

i think this is fiction.

Jul 11, 2012

Yes you are right, I made everything up.
Anyone with above average IQ with leverage during the 06-08 boom, could easily turn $6,000 into $70,000. I'm pretty sure nearly 90% of discretionary traders at a decent prop shop could have done this.

You totally misread my story. I skipped recruiting in junior because I thought BB was not for me. Recruiting season is pretty much over by March your senior year - I was still very much undecided at the time as to which route to pursue within finance. I started enjoying video games after graduation as well as the laid-back lifestyle that comes with graduating.

Prior to my internship with the Asset Management firm last year, I already had five full years of trading experience. But I do admit that I got very lucky in the sense that 1) i found a good internship opportunity even though i had skipped BB recruiting 2) that the PMs and the guy who owned the firm, really developed a keen interest in my skills and in my development.

So how does all of this sound far fetched? So based on all of this, wouldn't you think that some MD at a BB or a startup HF would give me a shot at a job when I'm pretty sure the experiences/school make me a decent contender for a job vs other recent graduates?

And thank you to everyone who replied. I think I'm going to go with the AM and hopefully I will get the opportunity to move over to HF in 6-7yrs time as a PM. I also think it's a safer choice than the startup HF as I dont see the AM really going out of business.

PenneTeller: I can't confirm or deny whether you've guessed it correctly. I kind of did alter the size of the AUM because I figured someone would try to guess fund. The AUM is still in the single digits. You mentioned that you've seen people go from AM to HF. In that case, have you seen or met a PM at HF who made the transition as an AM PM? Thank you so much for sharing your insight penne. :)

Jul 11, 2012

PenneTeller: I can't confirm or deny whether you've guessed it correctly. I kind of did alter the size of the AUM because I figured someone would try to guess fund. The AUM is still in the single digits. You mentioned that you've seen people go from AM to HF. In that case, have you seen or met a PM at HF who made the transition as an AM PM? Thank you so much for sharing your insight penne. :)

No guesses, just observations.

There are plenty of examples where there's been a switch from traditional AM to HF at the PM level.. For example, Jeff Ubben went from running the Fidelity Value Fund to Blum Capital to starting ValueAct. So there's precedent.

I'll water down your enthusiasm a bit with a couple of big caveats.

It really, really matters which traditional asset manager you go to. The institutional imperatives for a hedge fund are pretty different from most traditional asset managers. The absolute return focus of hedge funds is pretty unique compared to traditional asset managers who are much more incentivized to grow assets.

If you're going to learn securities analysis at a great mutual fund (think Dodge and Cox, Ruane Cunniff, Wellington, Fidelity, etc.), then you're going to be well placed because those skills are easily transferable from place to place.

If you're going to spend time doing high level asset allocation for a HNW individual between index ETFs, index bonds, and cash, then it's going to be pretty useless in the context of the majority of hedge funds. You might have the title of PM and you might be the one making the trades, but the job doesn't really bear any relation to what you'd do as the PM of a global macro or value fund.

I'd go even further to point out that many traditional asset managers that do individual stock picking don't come anywhere near the level of diligence that would be required of most long short equity hedge funds (hence my closet indexer comment). We've interviewed PMs from more traditional long-only asset managers before for analyst and idea generation roles and found that the quality is incredibly varied. With some, the experience was a net negative from our point of view, because they would have to unlearn half the things they knew about stock picking.

Given that knowledge, I'd be wary of assuming you could simply switch over from being a PM in an asset manager to becoming the PM of a hedge fund. The titles might be the same, the roles could be vastly different.

I don't know your situation, so you'll need to make the call on your own. Personally, I'd figure out if the asset manager you're interested in has outperformed its relevant benchmarks over time, who would teach you your trade, and what you'd spend most of your day on. You'll be able to figure it out from there.

Jul 11, 2012

PenneTeller, you are awesome. Ty for the detailed response.

Jul 21, 2012

You remind me of myself in a lot of ways. Go for the HF gig.

I'll add my 2c after I get back.

Jul 11, 2012