the career tradeoff for a PM - commodity merchant vs hedge fund - depth vs bredth.
This is a little specific, so sorry in advance. But it probably can be applied generically to a lot of us.
I am a reasonably talented and mid-level/rising (~5yrs of successful experience at good places) trader/investor that focuses on the commodities and macro space confronted with two options. Do I go to a hedge fund or a trade house? From the long term career perspective, is it better to go deep at a great place that will give me lots of capital or go broad at one with tighter risk limits?
I would think the + on the
* Your track record is viewed as portable.
* You have a broader mandate and can also do macro.
* Your payout in a good year is higher.
* You can ultimately lateral to other financial products like l/s equity if commodities becomes very boring (or even more boring).
The negatives are:
* There is very high netting risk.
* Risk limits are much more stringent.
* Capital is not permanent and can be flighty if the fund suffers a bad performance patch.
* HF industry is generically in decline (though can argue macro AUM has likely toughed).
* Spending on research/resources can be tight due to investor scrutiny of these line-items.
On the merchant side:
* Risk limits are long-term oriented and there is much less concern about month-to-month vol as long as thresholds are not breached.
* Capital allocated to your strategy can be ramped up very quickly based on performance.
* Much more robust set of research and analysis resources to tap into.
* Less (but still some) netting risk.
* Can participate in and originate some asset deals.
* "better" way of thinking about things. More patient and fundamentally oriented. Can take big positions and really swing if the conviction is there.
* Can ONLY trade a handful of commodities.
* Potentially stuck in commodities for the rest of career. Cannot broaden into a more well rounded trader.
* More limited exit opportunities if the space gets boring.
I'm having difficulty deciding between the two. Both are excellent opportunities. I guess the question I'm trying to ask myself is what is more important in the long-term career of a portfolio manager - patience of capital or product flexibility? Depth vs Breadth, from a career sustainability perspective. Which can you solve 2 years out, versus which is kindof permanent?
Anyone with relevant experience, I'd love some feedback on the decision you made, if analogous but in other asset classes, and whether in retrospect you feel it was the right one.
I do recognize that I'm lucky to have either one of these opportunities, and am thankful for everything that has happened to me thus far in my career. I know neither is a bad choice overall.