Saw this post on Reddit about a HF analyst posting his career earnings. The guy did BB IB -> HF and has seemed to have a successful career in the public markets. This is most likely what someone could expect working in the industry.
| +53 | Looking for a Fund Manager to partner with to start a new fund. | 26 | 16h | |
| +34 | Law to Quant Pivot? | 10 | 5d | |
| +30 | How to destress at Pod HF? | 10 | 3s | |
| +23 | Starting Personal Account | 12 | 3d | |
| +19 | Hedge Fund WLB | 6 | 4d | |
| +18 | Any R course recommendations? | 14 | 1d | |
| +17 | Track Record Expectation For PM's | 22 | 4h | |
| +16 | Which Funds focus on timing the broad market rather than L/S individual equities? | 10 | 3d | |
| +15 | CRE Team at Credit Oriented Hedge Fund | 3 | 6d | |
| +15 | CRE Team At Credit Oriented Hedge Fund | 0 | 6d |
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From the comments sounds like OP is a pod analyst who only just made PM and was blown out a couple of times - still decent $ over that career though
He said he's not a pm. left industry / came back a few times, and tracking $4m this year
Bold to underwrite $4m this early in the year lol so I assumed it was some kind of PM guarantee
Unless any pod shops allow you to shut down your sleeve when you’ve made enough for the year?
It really depends on fund size / tier and within that - formulaic payout vs purely discretionary. In this business you really need either formulaic pay or some equity in the firm to make a ton of $.
An enlightening comment for sure
Since everyone likes to think about right-tail events, let's think about a SUCCESSFUL ~15 year career at tier 1 fund(s) - so either a good team at a platform or a somewhat scaled single manager not facing the same structural headwinds everyone is. Remember reading this several years ago on another thread and agree with it. I'm a senior analyst and am basically on the below path, several friends are as well. Thinking of someone that joined HF in early to mid 20s, so you'd be 40 or early 40s after the 15 years:
"in order to have a $20mm net worth, that means you probably earned a cumulative headline figure closer to $50mm. Take out taxes and living expenses, and maybe add in some compounding and you get to $20mm or so net worth.
You likely didn't make shit (relatively speaking) for you first 5 years post-UG. So we're really talking about more like $50mm across 15 years, or an average of ~$3mm a year. In the HF business that usually looks more like two or so monster years, where maybe you had $10mm paydays getting you $20mm, maybe 4 years with mediocre performance where you just got $1mm / year, getting you to $24mm, with the remaining $26mm across 9 years (~$3m a year). This would be a fast tracked career at a sizeable fund, where you had the good fortune of also being in the right sector, in the right style, being able to survive for 15-20 years in this field, consistently putting up numbers both personally and as a fund to warrant a baseline comp of $3m, bad comp of $1m, and good comp of $10m.
That is a remarkable career."
So $20-25m by the around 40 or early 40s. Depending on where you're at, maybe the $10m looks like $15-20 and the $1m looks like $300-500k. Maybe the $3m looks like $4m or $5m idk. Really depends on the seat, but at the end of the day the math is the same - this NICHE path ends up $20-30m if MANY THINGS go right by 40 or so. Or maybe you're gifted and have 5 years of $10-20m instead of 2.
PLEASE Don't read this and think "ok great, I'll be worth over $20m by age 40" because unlike banking, your skillset / ability to monetize and bet on your work is key, so there's obviously some risk to A. lasting 15 years, and B. therefore making $20m. Can't emphasize that enough. No one cares if you're a hard worker, did great in school, did well in banking etc. None of that matters in this job. It's not just a "let me sign up, put my head down, make a bunch of money" thing, you really need to be exceptional. And you need either formulaic pay (meaning you're (ideally) a major risk taker at your fund) or have equity in the firm.
After ~15 years, you either A. start your own fund where you strike out / make nothing OR raise a few hundred / LSD billion and create generational wealth in the process, B. become a PM at a podshop (if you're not at one already), get paid a big $10-20+ guarantee, and from there either crush it and make even more OR collect your guarantee but struggle to put up good #s / scale your book and team --> you'll lose money and get fired in the downside scenario here, and C. retire and trade your PA - not subject to any compliance, can trade any names you like, spend as much time as you'd like, don't really need to short, have duration, can be concentrated, pick factors / rent beta etc, so a lot of people go this route and end up multiplying the $20m by a lot over their 40s / 50s. I know someone that retired right before COVID and made a FORTUNE during the pandemic (I reckon he's worth over $100m by now), there are also people who just want to own the market and run a SMB or something. If you retire at 40 with $20m, I don't see why that can't be $50m+ by 50 if you own the mkt, or $60-80m if you trade your PA well.
Again, I know everyone ONLY wants to hear right tail events, so this basically ignores the 80% of HF analysts at sub-tier 1 platforms working for bad PMs, smaller single managers etc. Even within that 10-20% at good podshop seats or good single managers, this doesn't apply to everyone since there's a longevity piece embedded in the 15 year assumption AND the assumption that you can generate MEANINGFUL PnL over you career...I can tell you firsthand it's not easy! Hope this answers your question and leads to good follow-up conversation below
It seems very realistic. I see a couple years where he made close to $0 and some other years where he made some solid money. tons of volatility in income and some failures along the way.
seems directionally accurate
Wonder how many shops the guy worked at. Seems like he took a gap as there are 3 or 4 years of minimal earnings. Must be a bit scary living on savings, especially with the lifestyle most of us end up having working in finance.
Something seems amiss. Even shit pod shops will pay a small salary. I honestly don’t know anyone earning less than $100k salary. So in bad years you’ll have a $100k floor. In years you’re fired you either make your salary from garden leave/non-compete, or you make nothing. The years where he makes $20k ish make no sense to me.
He said that he retired a few times, but came back because he loved investing. I'm not sure if this is true or if he just blew up at certain places.
...
I think people often forget that it’s the compounding of your savings that matter a lot towards building wealth. If you were consistent with putting money into the market, you would have made much more money over the past 10-15 years post-GFC and wouldn’t have needed to make $50M pre-tax to get to $20M+ net worth. This would have looked far less given market has compounded at like 10%+
By 40 - breakdown of outcomes. Seem reasonable?
good net worth: $50+
median: $10mm
bad: $1-5mm
Wow, the median is pretty high. Would have thought it was closer to $5ml but I have no real context for pods
For good tier 1 fund would think median higher
Surviving until 40 at a good tier 1, yes low. People starting their careers at a good tier 1, no.
Can someone link to the reddit thread?
Here you go:
https://www.reddit.com/r/Salary/comments/1c1vkel/hedge_fund_analyst/
Someone else posted their #s on the same sub from what appears to be a large credit SM
Interesting how this pod guy who’s never made PM and was unemployed for 2 years still edges out in career TC so far
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