I’m considering these 2 positions: one is as an investment analyst in a medium sized hedge fund in nyc and the other is as an a research analyst in an actively managed long-only equity mutual fund. Let’s say the mutual fund has $150B AUM (in all funds total) and the hedge fund has $2B to 3B AUM…and under 15 investment professionals. These are made up numbers. Let’s say the Hedge fund has been in existence between 10 and 15 years…and the mutual fund has been around 35 years or more. I’m trying to figure out how large the bonuses are in these 2 positions, median and range. 1 yr, 2yr, 5yr out? In which job do you think the analyst has to work more? Has more uncertain life? More stress? How different do you think these jobs are…and in what ways. FYI, the hedge fund’s strategies are based on fundamental research. My thinking is that the potential bonus is much larger in the hedge fund and if you are a high performer you can achieve this bonus much quicker…than in a mutual fund. however, the mutual fund job is much more steady. u could easily spend your entire career…20+ years with this one fund. Hedge funds usually last 5 years on average. then it is time to brush off the resume and find a new job, which sucks. although, this fund has been around longer and is expanding so this means it will be a survivor at a time when so many shops are closing down. It seems that mutual funds look at more qualitative factors when evaluating you…like how good of a communicator you are, are you very likable, etc. Whereas, hedge funds don’t care as much about this…they look more at performance. Relatively speaking, I would say I’m in the bottom half of the finance distribution when it comes to soft skills like speaking in public. I originally thought a mutual fund career would be better because it is lower stress and longer term. Which one would you choose and why?
hedge fund
A $3B HF that has been around for 10-15 years sounds like a great opportunity. If you have confidence in your ability to pick stocks, I’d definitely jump at that, but if you’re unsure, it might be best to take the long only.
Long / short hedge funds aren’t too bad in this market condition compared to other type of hedge funds, but I would still think twice. going into a long only would be a pretty secured job… but if money is what you are striving for. then hedge fund for sure.
FYI, this would be a new type of position for me, thus I don’t really know how good I would be in fundamental analysis for stock picking. I have done fundamental analysis before (financial statement analysis, dcf valuation, accounting knowledge) but not for investment management and I have done equity research in investment management previously but in quantitative strategies (thus zero fundamental research involved). Basically, I have the hard skills and knowledge to do the job and I have experience in investment management (arbitrage at a junior level)…however, I have never done fundamental research for investment research/stock picking…except for my own portfolio. Would this tip me to mutual fund?
For me, the HF position would more interesting. Seems like a good opportunity. . . one that you may not get again. Glad to hear that you have this problem; which job to choose.
markbot Wrote: ------------------------------------------------------- > FYI, this would be a new type of position for me, > thus I don’t really know how good I would be in > fundamental analysis for stock picking. > > I have done fundamental analysis before (financial > statement analysis, dcf valuation, accounting > knowledge) but not for investment management and I > have done equity research in investment management > previously but in quantitative strategies (thus > zero fundamental research involved). > > Basically, I have the hard skills and knowledge to > do the job and I have experience in investment > management (arbitrage at a junior > level)…however, I have never done fundamental > research for investment research/stock > picking…except for my own portfolio. > > Would this tip me to mutual fund? it’s very different, in the mutual fund realm most fund would have an average of 20-50% turnover per year. usually even lower turnover. in the hedge fund realm of long short, even your typical 130/30; the turnover can run up to 200%. thus the work you do is very different; the holdings are much less and larger for the mutual fund and you might have to do a lot of due diligence work but rather in the hedge fund, you are most doing price analysis etc and it’s much more short term. you normally dont’ short the security for a very long time
^completely disagree with the above. Most large mutual funds have vastly more positions and trade much more actively than any hedge fund. Fidelity Magellan for example holds hundreds if not thousands of stocks and trade millions of shares a day. Meanwhile someone like ESL does not trade at all and holds like 30 stocks.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > ^completely disagree with the above. Most large > mutual funds have vastly more positions and trade > much more actively than any hedge fund. Fidelity > Magellan for example holds hundreds if not > thousands of stocks and trade millions of shares a > day. Meanwhile someone like ESL does not trade at > all and holds like 30 stocks. Yes, in aggregate they do trade a lot more. But if you work as an analyst or PM for one of these large mutual funds, you general are placed in a specific sector and analysis those securities within that sector. Or if you are say a PM in a long only Large cap US equity, then you will only look at those security and trade much less. So i think you took the wrong stab at it, he was asking in particular to his role
I think it really depends on your risk tolerance and entrepreneurial spirit. A fundamental long / short equity fund running that much money isn’t going away anytime soon and it sounds like the mutual fund company is one of the giants or at least one of the bigger players. So the risk that either business goes up in smoke in the next 6 months or something seems nill. I would pick the hedge fund if you want a bigger risk with a bigger reward. How is the bonus pool strucutred? Based on analyst P&L? That’s something to consider. The other thing to think about too is that fund that size is going to it’s own way of doing things, the “xyz capital management way” or whatever. If you don’t adapt you may be shown the door but quickly but on the flip side it sounds like you have a lot of room to be molded so that may be a good thing. And maybe in a so many years you can branch off and start your own fund which would be easier to do coming from that background with a good track record. I think it would be harder to do that coming from a long only fund where you have no experience shorting. Bottom line: bigger risk, bigger reward.