Sell-side equity research vs AM equity research. Better path to a hedge fund? (London)
I have an offer from a large AM company in London (one of Aviva Investors, Axa Investors, Aberdeen, etc.), one in equity research at a major London bank (MS/JPM), and also two offers in IB from solid BBs (Citi/BAML/Credit Suisse). I applied to so many different divisions because although I am sure about my final goal of becoming a hedge fund Portfolio Manager, I am not sure about the best way to get there. I am interested in Long/Short strategies and other fundamentally driven HF investing. I am passionate about markets and investing which would lead me more towards sell-side ER or buy-side ER. Which offer is best among the two given my final objective? What about M&A? Would going through the painful years as an analyst give me much better exit opps?
I am also worried because a friend of mine in AM told me that at his firm PMs in their early 30s are making only ps 200K and that he thinks that very very few people at his firm even go above 500K, even in their 40s or 50s. Is that true? As I said, I am passionate about investing and I think long-term (no need to get rich in my 20s), however I would like to have a path to eventually make ps 2-3m a year. Is that not realistic in asset management? And finally, what offer is best to move to a hedge fund?
Thank you all for your help!
Given that you are interested in L/S and fundamentally driven strategies in HF, I would pick sell-side ER. I've done both sell and buy-side ER and the AM I was working for preferred quant strategies so I felt like the work that I did was highly dependent on the PM's style/preference. I barely did any fundamental modelling, as when we needed them we simply just asked the sell-side for their models and altered the assumptions.
Thank you, to be honest, though I am a little scared about the stability of see-side ER after Mifid 2, I have friends in sell-side ER desperate to join AM and I am scared to be the only one going the other way around. What would you pick between IB and buy-side equity research (AM)?
Hm the best thing about IB is that you are exposed to a variety of things and will learn a lot very fast, but the downside is the lack of exposure to the markets (relative to sell-side ER and buy-side AM). AM > IB for markets exposure and skillset but sadly in the real world HFs still hire significantly more bankers than research analysts :/
I hope this helps!
I work for a large long only asset manager as a senior analyst and am on a PM track. You are infinitely better off getting into the buyside to move to a HF. I could not even get HF interviews on the sell side but once I got to the buyside I literally got 5 interview requests (unsolicited) in the first few months. When you're in the buyside you're seen as better at research than being in the sell side.
I'm not knocking the one gentleman who pointed out his quant experience, as that's different. Just be sure you go to a fundamental valuation shop (if that's what you want to do).
Yes this is what I was implying in my first response - to make sure the AM shop you go to does fundamental valuation. Definitely wished I knew about this about my previous AM employers and the PMs.
Let us know what you picked in the end!
Hey, thank you so much for your response? Are you doing equities or credit at the moment? And were the headhunters that reached out to you for L/S roles? In any case it is clear from your response that buyside research > sell side research. What about investment banking? I am becoming concerned that if you can handle hours and shit work IB is the best of all worlds as not only it gives you much better than AM (in London a buy-side research analyst 8 years in can expect a total comp of £200K but an IB VP makes about £350K) and various exit opps (Private Equity, Industry), etc. I am also starting to think that it could even give better exit opps for hedge funds, What do you think about that? Do you agree? Should I just go for M&A? Again, I am sure I want to go to HFs but looks like M&A is just superior,
I am on the buy side doing credit research - IG and HY. I previously worked on the buy side in equity research and investment banking for 5 years. I would highly encourage you to not do sell side equity research. The industry pays terribly and is shrinking rapidly. You are much better off long term going into banking or buy side at a large asset manager.
Hey, thanks a lot for your response. Given all the previous answers I will definitely eliminate sell-side research. Now the question for me is: Asset management vs M&A. I am sure I want to be in hedge funds but I am starting to think that no matter what you want to do after, banking is better. Let me explain: Not only it gives you much better than AM (in London a buy-side research analyst 8 years in can expect a total comp of PS200K but an IB VP makes about PS350K, I am sure about those figures) and various exit opps (Private Equity, Industry), etc. I am also starting to think that it could even give better exit opps for hedge funds, What do you think about that? Do you agree? Should I just go for M&A?
bump
Don't do equity research. IB vs long only comes down to your preferences. I would take long only AM but understand if you took IB as that gives you more options down the road (can do PE or Corp Dev in addition to HF after IB). With that said, you may not get another long only opportunity following your stint in IB as I think those are the toughest jobs (on average) to get in finance. IB is pretty formulaic in how to get hired, hedge funds have alot of churn so there are a fair amount of seats generally open. Getting a job in long only investments is neither formulaic nor do they have alot of churn. Keep that in mind.
Yes I agree with you, spots are really in long only but that does not necessarily make it a better place. My question really is: Which gives me better odds to break into hedge funds? AM or IB?
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