What is the best approach to transition from an analyst to PM
I currently work in the systematic equity space as a quant analyst (at a MM platform). I have been doing this for a while now and I feel that I have a strong set of signals and a solid research process to take a shot at being a quant PM. I am not running my own sleeve, my signals are part of a bigger systematic book that's managed by the PM (my boss).
What is the right way to approach this ? I am trying to figure out the best way to convince another firm to let me run capital. It's well and good that I have signals that have a live track record (I guess it not something that can be verified since it runs as part of a bigger book) but apart from backtest and the numbers, what are the firms looking for in a candidate that's looking to transition from an analyst to a PM ?
No. Don't do it. Many pms are not in good shape recently.
the obvious answer is....start tracking the performance of your signals as tho you WERE running your own sleeve.
There are a few things you need to do when you transition from signal developer to PM...so start imagining you are already a PM, and "act asif"
Do your signals include both entry, stop-loss, and profit taking?
Have you done research on the various methods of entry / exit for your signals?
(all-in -> all-out, all-in -> scale out, scale-in -> scale-out) (both for profit taking and stop-loss)
What are the performance metrics of your signals, under these various execution strategies? (you should be able to back test this)
Produce a daily / weekly chart of back-tested portfolio performance under various money management strategies.
I've been asked for a backtest thru 2007 --> 2020 to show how a strategy performs during both stable and unstable regimes
(the 1st thing i was asked for was a historical chart of cumulative P&L...backtest for history and live for what has been actively traded)
You'll need to have all this stuff done before you bother applying for a PM seat, and you'll need to be able to talk about it. Do you have this now?
Just an FYI this process is a complete crapshoot. There are some terrible risk takers who get PM seats, and some really good ones who never get the shot. The problem is that stupid BD people are the gate keepers to the process. They seem to think that making 10 bucks at a Sharpe 2 over multiple years is the bare minimum to even get a conversation, as if all of their PMs run books that meet these requirements. Basically, this incentivizes everyone to lie about their performance - ESPECIALLY if you haven't been a PM before. If you've been a PM before somehow these requirements are completely moot e.g. they would rather hire someone who has blown up multiple times before rather than give someone a shot.
In a nutshell, the PM hiring process is flawed and makes no sense. Talk to as many people as possible and if you do have a track record either make sure it meets the requirements above or embellish it so it does. Everyone including recruiters, BD guys and PMs understand that everyone embellishes, so if you don't you are putting yourself at a disadvantage. I've seen people get PM seats who have no business running money - think a dev who worked tangentially with a PM who has never ran risk before, or an analyst who just claimed that the books performance was all his etc. Think about how it's possible that people like this get the seat.
This has been my experience as well hence the reason for my question in the first place. I am having better luck at sub-PM position talking to PMs who understand realistic numbers as opposed to BD folks who wont talk to people before a certain sharpe threshold.
IMO being a sub-PM isn’t much of an upgrade if you are already running risk. Especially as a quant you will be doing the same job. Maybe you will get a percent payout but it is all just semantics because you’ll have netting risk with the senior PM
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