Q&A: Non-Target School to Portfolio Manager at a Top Hedge Fund – 6 Years Out of Undergrad
Hello Fellow Monkeys,
For some background, I've been a member of the WSO community for years. Wasn't always the most active poster but, like for many others, WSO served as an immensely helpful source of information for me throughout undergrad. Especially coming from a non-target school, with a mediocre GPA, and no prior contacts in the industry, I specifically found the Q&A/AMA posts to be quite eye opening.
Now ~6 years removed from college, I figured that it may be worth hosting my own Q&A/AMA under a new username as a way to pay it forward. Happy to answer any and all questions as it relates to how I was able to break into the hedge fund industry, what I learned along the way, what the day to day looks like as a portfolio manager, how I think about managing risk, and/or anything in between.
Whether you’re someone who’s in the same or similar position as I was coming out of school, someone already in the industry looking to land a markets-based role, and/or someone simply just in search of some inspiration, I hope you guys find this Q&A as useful as I used to find them when I was on the other side of the interview table.
Please ask away!
Background
- Portfolio Manager at one of the top global macro hedge funds in the world. Specialize in discretionary and systematic interest rate relative value trading strategies.
- Youngest hedge fund portfolio manager globally at one of the industry’s top asset managers.
- Started as a buy side desk analyst out of undergrad at a structured products hedge fund before lateraling into trading. Eventually made the jump from trading to a portfolio manager running their own sleeve/pod of capital at a large blue chip global macro hedge fund.
- Self-taught programmer. Languages include Python, SQL, and VBA.
- Top 50 Non-Target School, Class of 2015. First generation American with no prior contacts in the industry.
WSO Mentor
Want to work with me? Check out my profile here.
Thanks for doing this! Inspiring and would just like to know a few things:
Of course, happy to help.
How did you go about self-teaching programming, and was that necessary for your ascension?
How did you "break into" the HF world from undergrad? Lots of networking while in school?
What are some journeys you've seen for nontraditional candidates (i.e. advanced degree people from doctorate programs)? Consulting --> HF?
Your points about how best to learn programming and step into that realm are spot on (you definitely learn more by doing and having a reason for doing than rolling your eyes back over some overly dry textbook). The only thing I'd add is that when you do get stuck and pull some snippets off of Github or Quora, take the time to read through the code and not just copy/paste it into your own. Take the time to ask and understand "Why was the code written this way? Why this order of calls and functions? Were they decent enough people to leave comments in the code to help explain?" etc so that when it comes time to write your own code from the ground up there's a solid basis and you can have that "Ah-ha!" moment and realize that maybe a function from an entirely different scenario would actually be a good piece to add in to this script for clearer/more accurate results.
1) How were you able to make the move straight into a buy-side idea generating position straight out of UG? I'm a few years out of UG and am finding it incredibly tough to even find these kind of positions to apply to (granted I am in London where the industry seems to be much more concentrated).
2) How did you make each successive jump?
1) How were you able to make the move straight into a buy-side idea generating position straight out of UG? I'm a few years out of UG and am finding it incredibly tough to even find these kind of positions to apply to (granted I am in London where the industry seems to be much more concentrated).
How did you make each successive jump?
Thanks for doing this Q&A.
1. What do you see as "standard" career progression for buyside macro analysts (knowing obviously that there isn't a cookie cutter path)? Specifically, in comparison to something like equities/credit which might might be more clear-cut/linear (2-3 years Jr. Analyst --> 2-3 years Sr. Analyst with some ability to run risk and PnL tie --> PM), is there something comparable for macro?
2. Is there a difference between the career progression of "research analysts" and "traders," or are they more or less the same and a macro "trader" is just a more senior role with direct tie to PnL (i.e. a PM or junior-PM type role)?
3. What advice would you give to someone who went straight into global macro out of undergrad and is gunning for a PM role 5-7 years down the line?
4. Do you think sell-side/market-making experience is necessary/helpful to move into a risk-taking role (i.e. PM or trader) on the buyside? Why did you decide to lateral into trading?
5. Aside from credit and rates, did you ever trade other asset classes (e.g. commodities, FX, etc.)? Why did you decide to specialize in relative value?
6. Lastly, what do you think of the move in rates recently (last couple weeks). Seems like economic data is rolling over the wrong way and it also seems unlikely that the economy is going to recover from COVID (employment-population ratio, labor force participation, etc.), not to mention supply chain issues and potential risk-off sentiment driven by China's RE issues - so I would expect further downside in long end UST yields from a fundamentals perspective.
However, I was hearing some rumors that some of the more violent bear steepener moves were driven by rate vol ticking higher combined with elevated payer ratios triggering dealer hedging flows (+ mortgage convexity kicking in).
What is your intermediate-term outlook on rates (3-9 months from now)?
Sure, happy to help. Thanks for the thorough set of questions.
1. What do you see as "standard" career progression for buyside macro analysts (knowing obviously that there isn't a cookie cutter path)? Specifically, in comparison to something like equities/credit which might might be more clear-cut/linear (2-3 years Jr. Analyst --> 2-3 years Sr. Analyst with some ability to run risk and PnL tie --> PM), is there something comparable for macro?
2. Is there a difference between the career progression of "research analysts" and "traders," or are they more or less the same and a macro "trader" is just a more senior role with direct tie to PnL (i.e. a PM or junior-PM type role)?
3. What advice would you give to someone who went straight into global macro out of undergrad and is gunning for a PM role 5-7 years down the line?
4. Do you think sell-side/market-making experience is necessary/helpful to move into a risk-taking role (i.e. PM or trader) on the buyside? Why did you decide to lateral into trading?
5. Aside from credit and rates, did you ever trade other asset classes (e.g. commodities, FX, etc.)? Why did you decide to specialize in relative value?
6. Lastly, what do you think of the move in rates recently (last couple weeks). Seems like economic data is rolling over the wrong way and it also seems unlikely that the economy is going to recover from COVID (employment-population ratio, labor force participation, etc.), not to mention supply chain issues and potential risk-off sentiment driven by China's RE issues - so I would expect further downside in long end UST yields from a fundamentals perspective.
However, I was hearing some rumors that some of the more violent bear steepener moves were driven by rate vol ticking higher combined with elevated payer ratios triggering dealer hedging flows (+ mortgage convexity kicking in).
What is your intermediate-term outlook on rates (3-9 months from now)?
Coming back to this post, I hope OP has done well. Some of these views were extremely prescient and would have made you a lot of money.
Sorry if this sounds dumb - and long as fuck but this is something I've thought about, never really precisely and although have a lot of contacts in finance, no one that I think would be able to provide a good answer to this. Also helps I'm anonymous.
This is fairly stream of consciousness but I grinded super hard as a non-target, broke into a BB against some pretty ridiculous odds I would say and then into MF PE. And when I say ridiculous odds, I read about the TA earlier who broke in after 11 years and I think my story is probably just as good. But at the same time I acknowledge that my edge has never been that I've been the smartest or the most studious. I'm good at quickly synthesizing ideas, quickly dissecting something I've read, and looping data in together as I speak in a way that makes sense. But I think I also fall prey to over-assessing my own ability sometimes and not being checked hard enough to whether I'm as good as I think I am.
I've been thinking of transitioning into HF work but honestly... I just really don't have that big of a passion for the public markets. I've never owned a portfolio and I've never been curious about owning a stock. Honestly the main reason I'm in finance other than the money is because I hated studying in school but I also liked to be challenged and heard finance was hard to get into, so I wanted to give it a shot. I like to be challenged and I've found that I learn things quickly, and that for the things I don't, I put in more time than anyone to learn...if I'm interested in it. You might infer from that I'm hard working, but I'm probably one of the most lazy/lethargic people I know. I'm the type of guy to put in 30 hours on a weekend if needed and then pretend to work the next week using a mouse program to look available on Zoom. Once I find something interesting / I feel like I'm uncovering a piece of the puzzle, I can't drop it. I can work through not eating, stay up, and feel totally zen. Honestly I've gone through so much stuff to where I genuinely don't feel that much stress. I just get a little tingle. But calm.
Every job I've had had an insanely steep learning curve that I eventually overcame and eventually kind of found boring/rhythmatic. At the same time I guess I am a bit risk averse when it comes to my personal money since I don't come from a lot so I really value 1) not losing (I hate losing more than I like winning) and 2) milking something for every penny I paid for. I'm the type of guy to make 300k a year, spend $300 on a nice dinner date and feel fine about it, but be on the phone for an hour if I get fucked for $30.
Do you think I'd be a fit? Is there literature you recommend reading? Would you be able to make a list of questions to help me understand more about what the job is like and if I would enjoy it? I feel lost on whether or not this is something even worth pursuing or if I'm being stupid. I'm guaranteed to make tons of fucking money if I just stay the path. But a part of me thinks "do you actually enjoy what you're doing?" And I think the answer is I don't mind it. But at a certain point it feels like my hunger isn't being satiated... like I'm in this safe zone where I'm not winning or losing... I'm just existing. Maybe this will change as I get more senior (if I get more senior) on the buy-side but...yeah. Would appreciate any direction for what I acknowledge is an extremely obscure prompt. Thanks man.
I can always appreciate a candid post. You're definitely not alone. There are definitely plenty of people out there with similar thoughts so hopefully the following helps. For the sake of readability, I'll decompose your post into its primary parts.
Do you think I'd be a fit?
Is there literature you recommend reading?
Would you be able to make a list of questions to help me understand more about what the job is like and if I would enjoy it?
Sure, here's a start:
Super interesting. Thanks so much. Apologies for the late response here - have been fielding some personal problems IRL
It’s like you were writing it straight from my mouth. You more than likely have Adhd, or at least I do and it causes all of the above prescribed. You may also be an enneagram 3 ha
I did the Enneagram test just because you mentioned it, and indeed 3 was my #2 (7 was my #1 by 2 points)
Perhaps - never took any meds or got diagnosed, but symptoms-wise perhaps matches to very mild ADHD nowadays. Was probably more prominent as a teenager (and even more so in grade school - got kicked out of classrooms all the time)
Awesome profile. What have your returns been? Do you think we are in a bubble ? What is the next data metric that would make the markets correct?
Thanks man. See below.
What have your returns been?
Do you think we are in a bubble ?
What is the next data metric that would make the markets correct?
You sir are a boss, great thread and in depth information.
Could you provide a bit of color, about how your firm deals with costs, be it seat cost or if any costs in your control. Do you have an analyst or shared resources. I often think people never discuss on here the actual costs/hurdles that come with the position. The way you explained how to grow a book is a great example and why as you grow your book have to change styles and adapt to the firm rules somewhat.
Lastly, as someone in commodities I will give my thoughts on your commentary, which I rather enjoyed.
You nailed it about the “european energy crisis” intersecting directly now with the euopean rates markets and it just going to get worse. To put this into more perspective for readers; india ran out of variable coal this week, while a german coal plant was forced off due to no supply last week. The energy crisis is very real and europe has ran out of time to solve it. China announced this week they will no matter what outbid the market to make sure they have energy security this winter, China is now a first world nation that will not let its people freeze. While at the same time as expected various EU governments have planned bailouts now that they are fully understanding the situation.
I agree with all your covid views, we have been tracking data for 18months and the recovery is well real and one of the reasons for the current energy crisis. Sadly where I may differ I do not see a quick end to this to say this is the turning point where “energy inflation” can calm down. EU/China/India have all made a concerted effort around energy transition and $100 JKM in Jan22 wont change their minds. While I do not think TTF will be 100 eur next summer or JKM $35. I think the days of JKM being $2 to $5 are far gone. Several countries led by UK have already said the real solution longterm is more renewables, this is milennial drive or just theme of where the world is today. Plus I am not fully sure if the “energy inflation” will crush GDP enough for people to care, most people are shellshocked at todays crazy prices but overtime will adjust just like their parents did years ago. The end result of this will EUA continuing its long-term bull market structure and ultimately the “upfront cost” of energy infrastructure going up at a time everyone is building, be either from the metals market being squeezed for materials or lack of labour. So while daily/seasonal volatility may have days with $0 power and others with $300 power the longterm upfront cost to nations/utilities/end-users will go up.
The way you explained how the rates market/cycles dealing with this is quite fascinating and think that relationship and causation will continue to grow all over. The big question mark is how will central banks react, OPEC will meet on Monday to very likely speed up the timeline they bring production back to help appease Biden and some other leaders. But in reality the flattening of the 3-5yr Brent curve over the last 4-6 months is signaling to them it is time to bring back supply faster. Energy producers prefer flat curves to massive backwardated ones they much rather produce and manage costs vs time a boom/bust market (as cool as selling $100 oil or $25 natty may be). So will central banks care in 2 months time when Brent outright prices possibly barely move and we just get a flatter curve will be a big question.
Thanks! Glad you have found some of these posts useful. Also I very much appreciate you sharing your views. Trading markets is a team sport and we can't be successful without having our views challenged or refined.
Could you provide a bit of color, about how your firm deals with costs be it seat cost or if any costs in your control?
Do you have an analyst or shared resources? I often think people never discuss on here the actual costs/hurdles that come with the position.
Addressing your views on Energy
What are some tips you would recommend for a non target student trying to break into hedge fund from undergrad?
Well, outside what I've posted above, I'd say the following quick tips should bode you well:
First off, thanks for doing this post - super helpful.
Do you have any advice on moving from a sales seats to the buy side in the macro space? Some background on me, I've been on a macro sales desk for the last 3.5 years. Prior to that I did a short 1 year stint at a tech consulting firm so I do have a base knowledge in VBA, Python, SQL but haven't used them really at all in my current seat. At my current firm I've positioned myself to do some work with one of our desk strategists, specifically on idea generation. I have a genuine passion for markets, particularly macro and would be following them closely even if it wasn't my job.
I know the jump from sales to the buy side is less common but doable. Do you think it would make more sense to try and move into a trading or analyst seat on the sell side (I think that would be a challenge at my current firm) or try and make the jump through a close relationship with a client that has an opening and is willing to take the risk on me because they already know me well. Appreciate any thoughts or advice.
Hey there. Yes, the move is definitely possible. However, in your shoes, I think it any potential jump is likely to boil down to 3 scenarios. I have ordered the below in descending order of importance.
I'll elaborate a bit further below:
Lastly, quick note on building your technical skills, see my previous posts. Regardless of whether you stay in Sales or make the jump to the buy-side, these skills will only help you in the long run. College is over, so no one is left in life to teach you these skills except yourself. So definitely take the initiative to begin building those skills now. You'll thank yourself later.
That's super helpful. Appreciate it.
Hi, thanks for this. Would you say fx/rates options trading at BB S&T to a macro hedge fund is a common path and if so what sort of timeline have you most commonly seen? Also, would you have any specific advice on how to be a good trader and eventually move to a HF for someone starting out in S&T fx/rates options? Thank you!
Hi, thanks for the post. See my quick thoughts below.
This thread has been absolutely incredible - appreciate your time on this.
Could you explain how you chose which strategy you wanted to invest within? I am an incoming BB IB M&A analyst and trying to assess my options and am not interested in PE. I think activism is cool but the HF world seems so hush hush. I feel like I don't even know where to being. Thank you in advance! Also any resources, podcasts, books would be incredibly helpful.
Could you also share what type of people/personality/skillset is more relevant for HF or the different strategies?
Also, have never done a stock pitch and don't know where to begin on that either. I come from an incredibly nontarget school with no alumni connects, I cold emailed/networking called my way into my past internships. I have the hustle and desire just not a lot of direction.
Hey there, glad you have found this thread helpful. Apologies for the delayed response, this past week was brutally busy for markets.
Could you explain how you chose which strategy you wanted to invest within?
Could you also share what type of people/personality/skillset is more relevant for HF or the different strategies?
Also, have never done a stock pitch and don't know where to begin on that either.
Thank you ever so much! You are one of the good ones, I wish you nothing but good things!
Thanks so much for doing this. Do you have a preferred approach in terms of coming up with ideas, eg systematic screeners to bring your attention to potential dislocations vs coming up with theses based on what you see going on in the world then taking a closer look at the relevant markets? Separately, to the extent you're able to share/are aware, how would you compare the cultures at your shop vs Tudor or Element?
Appreciate you doing this! Do you have any advice on making it to top macro hedge funds despite being on a badly ranked sell side rates desk? Ie small balance sheet, little interaction with top pods etc
What is the culture/environment like in your fund and and general? is it cut-throat and competitive like in IB or is it more relaxed and friendly
How much do u make?
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