Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role
Based on some of the feedback from the thread titled "Associate Comp at HF?", figured I'd set up this Q&A if I can be of any help to prospective or junior HF analysts looking to make the jump to a risk-taking seat. A lot of the boilerplate questions that usually get asked on these (background, coverage, comp, lifestyle etc) were addressed in the aforementioned thread, so I would encourage you to read through that first (my responses are from "Analyst 3+ in HF - Equity Hedge"). I've copied a few of the responses from that thread below, but would still recommend going through that and reading responses from a few of the senior folks that chimed in for full context.
I'll try my best to keep answers as objective as possible, but as always, your mileage may vary and there's a significant amount of randomness involved in outcome even if you input the exact same steps as I did. So, I'd ask that questions be focused on process vs outcome, career/role transition points, or the like. I'm not keen on answering anything more revealing on background, fund, coverage, etc, and have included as much information as I'm willing to share below and in the other thread to get those questions out of the way.
5th yr at a HF ($5bn+ AUM) and 1.5yrs in banking at a top firm prior to that. I spent my first 2yrs in HF in a junior analyst role and after that transitioned into a role where I had risk responsibility (lots of variation in titles for this sort of role at HFs - senior analyst, senior associate, associate PM, junior PM, principal, etc).
If helpful, my earnings arc has been the following since graduating college. First working at a top IB, and then working at a large equity L/S fund in NYC. All figures are annualized base + bonus + deferred. From convos with peers, first 3yrs were roughly in-line with avg for type / size / credibility of firm, and the last 2yrs have been decently above peer avg (personal performance driven). Comp volatility obviously increases the further out you go.
Yr 1 (IB): $140k
Yr 2 (HF): $275k
Yr 3 (HF): $400k
Yr 4 (HF): $1mm+
Yr 5 (HF): $1mm+
These are all great points in this reply and the prior person's reply. Always take comp #s with a grain of salt and understand what percentile you're pegging ambitions to and whether you have a realistic shot of getting there (side note: percentile of comp doesn't necessarily correlate with percentile of intelligence). I do think there's a high degree of over-averaging on this forum though, and there isn't great insight into what comp in the "good seats" looks like. Avg comp will be far lower than the numbers I gave because the average fund economics are mediocre and deteriorating (operating leverage + fee compression), and the avg fund doesn't have a reason to exist given persistent underperformance vs benchmarks. Like many other industries, right tail performers will keep a very disproportionate share of industry wealth.
What I've always found helpful is understanding the range of outcomes, and probability adjusting your own potential to be in each situation. While there's a significant amount of luck in performance, getting in the "right" seat , or working for the "right boss", there are simultaneously several controllables / diligence-able fund characteristics / process dynamics that will help narrow down the universe of good seats or help you be a better performer (in the event you're actually able to be a chooser and not just a beggar). If it's of any interest to the juniors / prospects, happy to do a separate AMA on some of those factors that I've found valuable (ymmv) in recruiting and in the transition from a the junior to risk-taking role, and I think it could benefit from some of the successful / senior guys chiming in as well. Not enough discussion on process vs outcome on this sort of stuff.
Hours / Lifestyle:
So it's always difficult to give a meaningful average given event / performance volatility. But what I would say is I work a lot, and more than my peers at other firms (and even within my firm) since I'm in more of a risk-taking seat and on the young side in that sort of seat. The difference vs IB, PE, etc hours is that it's far more self-imposed and nobody is breathing down my neck on any regular basis. I do have a high level of flexibility on how I shift those hours throughout the week, and I rarely miss important personal events. The hours are more mentally taxing though, and you physically feel it a lot more than IB. Genuinely not a facetime culture at the firm, but a get shit done / high accountability culture.
In terms of specifics, I generally work 6 full days/wk, and ~70-80hrs/wk under normal circumstances. More than that around earnings and conferences, and less than that schedule permitting. Last year was obviously an anomaly in the markets, and I clocked in 100hr+ weeks pretty regularly, pulled multiple all-nighters, etc. Was a real throwback to the IB days... But again, it was less about someone breathing down my neck (we fared well throughout the periods of high volatility), and more about the volatility creating very rich opportunity sets that you wanted to work through as quickly as possible.
Under normal circumstances, I'd say there's nothing precluding me from working 50hrs/wk. Just a personal choice. I generally enjoy my job (don't get me wrong, there are days/weeks that suck) and had a relatively unique opportunity to move into a risk-taking role early where the learning curve was quite steep and I have been front-loading a lot of the effort (TBD if/when that tapers down). It's been an unsustainable pace over the last 12mo though.
Nope. I started out with pretty broad industry coverage that narrowed over time into now almost entirely focusing on one non-tech sector. Won't get more specific than that.