I am a 24 year-old working an Ops job at a prominent Hedge Fund, went to a non-target school ~40th in the country, a little higher in business school rankings. Taking CFA 3 in June, some coding background. I've been trying to move into a non-sales front office role either buy or sell side for about a year with little success. I've been offered an Analyst job at a PE firm $60+ billion in AUM, a significant portion of that is FOF but they do coinvestments regularly as well.
My question is whether I should take the offer because I haven't gotten many other bites in my job search and I'm not getting any younger, or should I wait and keep going with the CFA/Other Certs/Coding and wait for something better? I've read what there is on here about PE FOF and it isn't very positive, but that is usually contrasting with a PE primary fund which I wouldnt be able to get a job at currently.
The way I see it I have a few options:
- Take the job, figure out next steps next year
- Stay where I am, keep applying, hope that since I add experience/new qualifications all the time that something clicks
- Go back to school, either for an MBA or in a more specialized program like a quant finance masters. I've always thought that I'd go back to school and it would be a natural transition, but it would depend on what school I could get into. I've heard some cautionary tales about trying to use MBA as a career reboot, and don't really see the value in another business degree since I was a business/finance undergrad, it would really just be to put the name on the resume. There was a Journal article on Monday about quant recruiting that was really promising, and between the CFA/coding/experience I think I could get in to a good program. My SAT score was almost perfect so I think I'll do well on the GRE/GMAT for what thats worth.
- Go FinTech. Could be a great work/life balance and opportunity for growth, but I don't really care about that stuff and max earnings are lower.
So this is a long winded way of asking for thoughts/advice, any help is appreciated.
I would take the job. You've been recruiting for a year without much success, and this is a front office role. Even if it sucks, the transition to any other role with real analysis will be miles easier from this role than from an ops role. I don't see how option 2 can be preferable to 1. Option 3 is expensive and risky. I don't really know what you mean by option 4. So yeah, I'd take it.
FWIW I do think FOFs will eventually go away (or substantially consolidate) - paying fees on fees is just too much of an expense load (there was some HFOF manager that bet Buffett or something and lost. IIRC, fee load was a big factor). But you're 24 - it's not like you're betting your whole career on FOF's over the long term. And even if FOF's go away, that skill set will still be applicable elsewhere since other types of LPs will still be around.
I don't think FoF is going away - there are a lot of investors who don't have the bandwidth or capital to properly diversify in PE, so they get PE through a FoF.
To the OP, I'd take it. See if you can try to work on a few secondaries, then try to transfer to a secondary dedicated role. The market for your age group with any secondary experience at all is pretty hot right now.
Agree that FoF will likely remain, if not increase as an asset. Fee compression already has and will continue to occur but several factors continue to propel FoF’s. For private equity in particular, oversubscription to funds is making it increasingly difficult to get access to high quality managers. Established FoF’s can offer that access to investors. This will continue to drive AUM in the short to medium term for PE. Outsourcing manager diligence could also be a benefit for institutional investors whose assets grow and become more time intensive to manage
Thanks, I agree that its hard to see how 2 is better than 1, I'm just trying to gauge my chances of getting something better. Option 4 is working for somewhere like Betterment or the million other FinTech companies that think they need finance people, I have a friend thats BA at a PE software company that loves it and gets paid well, but youre a BA at those places and not doing what I enjoy. Really appreciate the advice
I believe the bet in question was the manager thought he could have found a good basket of HFs to invest in, while Buffett said a simple S&P index fund would be better, and he won.
Would recommend taking the FOF gig. $60bn+ AUM is a sizeable amount for a shop focused on PE FOF so I imagine it is one of the more reputable ones with an established track record of operations (and broad GP network). Obviously you should be aware that the primary side of FOF investing is pretty qualitative in nature and not exactly the most "technical" skill set, but if you have opportunities to evaluate potential secondary portfolio sales and/or co-investment opportunities, it's a no-brainer and definitely a better potential career path than ops. The work-life balance and pay in FOF business isn't the worst either (based on my experience of interning at a FOF / evaluating a full time opportunity back when I was an undergrad a decade ago).
Thank you, why secondaries? Wouldnt coinvestments be a better opportunity to build modeling skills? I agree FOF has a runway since allocations to PE are increasing so much every year. Work life balance at this place seems pretty good (half the time you work 8:30-5:30) so that seems like a good thing too
Thank you for the advice all of you, everything is very much appreciated. Seems like it is 4/4 take the job right now
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