Tech vs Hedge Funds

Subscribe

What do you guys think about tech vs hedge fund quant jobs? It seems to me that at least in the past 10 years, the promise of hedge funds isn't paying off. Tech is starting to pay better and better and better and the exit options are way better than a fund. The sun seems to be setting on the Wintons, the AHLs the Brevan Howards, the GSAs, the GAMs, the BAMs, etc. It seems to me that the idea of hedge funds - a few smart people with an edge in some area making money and sharing the profits is no longer valid. If anything a tech startup seems to be truer to this idea than a hedge fund (even the startup ones).

Comments (63)

 
  • Quant in HF - Other
Jul 15, 2020 - 7:58am

In London finance (mean tech-driven finance == Citadel/Quadrature/XTX/Jump/JS/HRT) pays much better than pure tech (FAANG, etc.). Maybe Snap or Deepmind compete (especially when you joined @ 8 per share).

 
  • Analyst 3+ in HF - EquityHedge
Jul 15, 2020 - 9:23am

Deepmind is no longer lucrative. Not sure what you mean by 8 per share. Stock bonus is in google bucks.

Citadel london actually pays less than USA, and over here PhD FAANG on west coast is comparable to a mid-level quant without PnL linkage.

The other names all pay well because they are in niche spaces and really good at what they do, for now. Curious, you didn't mention G research, are they not very big quant fund over there? Or do they not pay very well?

 
  • Quant in HF - Other
Jul 15, 2020 - 9:30am

> Not sure what you mean by 8 per share.

I meant Snap when it was 8 per share. Know couple of persons who got there and got stock bonuses priced at 8. Now Snap is 25.

> Deepmind is no longer lucrative

What do you mean? Have an ex-colleague joined last year, the comp is higher than FAANG in London and compares to quants.

> Curious, you didn't mention G research

Just forgot about G-Research (and probably there are couple more names that I forgot). They also pay well.

> Citadel london actually pays less than USA

This is generally true. But still higher than almost everything in London for techies.

 
Jul 15, 2020 - 11:29am

I'm not sure if this is a valid comparison. I realise that to have a valid comparison we need to get into statistics, but last time I was moving jobs, I was shocked at the low pay in some of the funds (£80-90k) who also have poor performance so the idea that they'll compensate with a bonus is admirable but laughable. It was even lower than banks where I was looking at 130-150k + bonus.

Meanwhile tech companies started coming out with 120k job offers.

Yes, perhaps some of these places could pay that much for techies but these are far and few in between and the exception rather than the rule.

 
  • Quant in HF - Other
Jul 15, 2020 - 11:41am

Are you sure that the places I mentioned offered you <100K GBP base? I would be really surprised. Citadel will definitely beat this number by a huge margin (their range starts with >100K base). Same with XTX/JS/Quadrature (the latter may offer some personages <100K base). And this is for junior talent in both tech and quant departments.

RE: G-R. I was only talking about comp. Culture is a completely different topic whic is worth discussing.

 
  • Intern in HF - EquityHedge
Jul 15, 2020 - 9:17am

Well it really depends. It's more of a lifestyle choice. Tech is definitely an easier path to take compared to quant funds. I know people that work 10-4 at FAANGM and make around 180k all-in after school. However, I also know people at quant funds and prop shops that make over 250k right after school. In tech, you have the option of being content and staying a senior developer/swe, but in quant funds you have to perform.

Array
 
Most Helpful
Jul 15, 2020 - 11:36am

This conversation happens every few months (maybe weeks) on this forum.

HFs are higher vol with higher upside. If you are good (ok maybe great) and have some luck (as teams can get cut due to poor senior people, etc) you will do better at a HF. The strong players in that industry continue to be strong and attract assets, clients, and fees.

Tech (outside of startups) is lower vol, lower ceiling, but better lifestyle and stability. If you are good/great here you’ll be capped lower (ignoring the complete outliers) and it is less meritocratic. You will rarely see a 30 year old in tech making $2-3mm. While also rare in HFs, when you have direct PnL it becomes easier to argue for this.

Of all the people I know, the highest earners are successful at funds, prop firms, or similar. The tech firms are good, but a noticeable difference in pay.

That being said, I’ve never had a friend or acquaintance fired from a tech firm, very different story in finance.

Array
 
  • Analyst 3+ in HF - EquityHedge
Jul 16, 2020 - 9:59am

PLenty of people have been fired from tech. Amazon is infamous for putting SWE on pip as an excuse to reduce headcount.

30yo on 2-3MM is unheard of in tech, unless your name is Ian Goodfellow and he was at the right place, right time with deep learning taking off. There are maybe less than 10 people on a similar level.

However, even in hedge funds this is extremely rare. Its the equivalent of a very successful PM running a small 200MM book. And outperforming every year. Not to mention career risk, I've seen way too many analysts that think they know what they're doing, go to citadel and last <18mths.

I think a fairer comparison would be a senior/principal engineer at FAANG on the individual contribution track. If you include stock appreciation they're probably pulling ~500k. Analysts (in quant and L/S) are probably at this level if we're looking at median.

 
Jul 16, 2020 - 10:19am

Yes on the amazon side, I’ve seen less so on others but I can believe that.

On the comp side on HF, yes you need to be a high performer, but it is possible and have seen many cases.

As I said originally if you are very good in the HF space you won’t be leaving for money. I’ve had technology firms (FAANG) reach out and the ranges don’t get close (30-50%) at their senior levels.

Array
 
Jul 16, 2020 - 5:50pm

This is exactly my point. 2-3 million end of year comp is almost unheard of EVEN if you're linked to PnL. I'd love to see the maths behind this comp number - I could be wrong.

The firing part - I don't think tech is as safe a job as most people think. Due to differences in the nature of both businesses I believe firings happen in a different way. You can imagine a HF having several bad years and just down-scaling and waiting for more favourable market conditions when your signals return better results. Not something you can do in a tech company. Ultimately, a tech company will also get compensated for any work even during recessions etc.

 
Jul 16, 2020 - 1:28pm

There is a long list of London quant funds that have laid off people substantially in the last 2 years. I got told my a few prominent headhunters that a lot of groups have been wound down (eg Capula, Balyasny) and others downsized a lot (Winton/GSA). I think places like Jump are finding their well running dry. Im not sure who is actually doing well.

The thing about tech is that getting into a Google/Facebook isnt a easy task, even if you are really smart, and moreover your background wont be that aligned to their needs possibly.

 
  • Analyst 3+ in HF - EquityHedge
Jul 16, 2020 - 9:21pm

Citadel Sec is doing well, all the names you mentioned are market makers. And to support OP's original point, actual SWE on cor engineering at these names are pulling in 500k+ which is comparable if not more than quants. In fact I would say except for the extreme right tail the distribution for SWE dominates that of quants if you include positions at market makers.

 
Jul 19, 2020 - 4:25am
Start Discussion

Total Avg Compensation

September 2020 Hedge Fund

  • Vice President (18) $520
  • Director/MD (10) $359
  • Portfolio Manager (7) $297
  • 3rd+ Year Associate (18) $269
  • 2nd Year Associate (25) $242
  • Engineer/Quant (46) $237
  • 1st Year Associate (58) $189
  • Analysts (175) $167
  • Intern/Summer Associate (12) $134
  • Junior Trader (5) $102
  • Intern/Summer Analyst (183) $80

Leaderboard See all

1
Jamoldo's picture
Jamoldo
98.3
2
LonLonMilk's picture
LonLonMilk
98.3
3
Secyh62's picture
Secyh62
98.2
4
CompBanker's picture
CompBanker
97.8
5
Addinator's picture
Addinator
97.6
6
Edifice's picture
Edifice
97.6
7
redever's picture
redever
97.6
8
frgna's picture
frgna
97.5
9
NuckFuts's picture
NuckFuts
97.5
10
bolo up's picture
bolo up
97.4