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Best route to portfolio manager/ HF manager

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    Recently I have been reading quite a few books on successful hedge fund managers. The one thing that struck me is that most of them have very varied backgrounds and have risen up due to skill and an element of luck.

    Given the world of finance is different from 20-30 years ago in that financial institutions have consolidated and career paths are more linear, I was wondering what is the best route to become a HF manager.

    Obviously a track record is essential. But is coming from the buy side i.e. asset management like Hendry a more likely path than coming from the sell side like many of the prop traders who have now set up funds.

    One thing that struck me is that a lot of the best managers e.g. Paul Tudor Jones, started out as commodities traders in pits. Commodities trading seems to have offered a much larger share of successful macro fund managers than any other path. Yet pit trading is something which is not really a viable option for a graduate and potentially the days of the pit are numbered.

    I would be interested on peoples views as to career progression.
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    (Original post by gangst)
    Recently I have been reading quite a few books on successful hedge fund managers. The one thing that struck me is that most of them have very varied backgrounds and have risen up due to skill and an element of luck.

    Given the world of finance is different from 20-30 years ago in that financial institutions have consolidated and career paths are more linear, I was wondering what is the best route to become a HF manager.

    Obviously a track record is essential. But is coming from the buy side i.e. asset management like Hendry a more likely path than coming from the sell side like many of the prop traders who have now set up funds.

    One thing that struck me is that a lot of the best managers e.g. Paul Tudor Jones, started out as commodities traders in pits. Commodities trading seems to have offered a much larger share of successful macro fund managers than any other path. Yet pit trading is something which is not really a viable option for a graduate and potentially the days of the pit are numbered.

    I would be interested on peoples views as to career progression.
    I think the past is going to be very different from the future. In the past, it was easy to get money, it was easy to make money. Now a lot of the money is just flowing to the large funds (Winton/Bluecrest/Brevan Howard) or being taken out altogether. Other funds will struggle or quit. Two places that hire grads and are an example of the latter are SWIP and Martin Currie, although I doubt either will be hiring again anytime soon.

    It is difficult to make generalizations about what the best route is because no1 knows what the future will look like. Commodities hasn't offered a lot of macro guys. Maybe 30 years ago but the guys who run funds now (who started in the 90s) are more likely to come from trading at IB. Upcoming legislation may affect that though. It is worth pointing out as well that the UK is different from the US. In the US, you find a lot of long/short guys worked in IBD first. In the UK, this doesn't happen because you can go straight into AM. Accountancy is a common starting point too. It depends on what you want to do though. If you move to the buy-side, try and go somewhere with low turnover, that has solid institutional clients, and that didn't struggle through the crisis. Getting a job anywhere atm tho is difficult.

    I really wouldn't underestimate luck. I know someone who used to work with Hendry and it is pretty clear he has been very lucky. He was lucky to get into Baillie Gifford when he did (he was one of the first non-Oxbridge hires). When he was there he rubbed people up the wrong way. It was lucky that he moved Odey (it was unlucky he moved to CSAM), he wouldn't have done as well many other places, and he is terrible at marketing his fund. PTG is another example of someone who was very lucky (as far as I can tell, there appears to be little discernible logic to almost everything he does). Obviously, both are great PMs but you need to be lucky. You have to make your own luck tho.
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    (Original post by crcr)

    I really wouldn't underestimate luck. I know someone who used to work with Hendry and it is pretty clear he has been very lucky. He was lucky to get into Baillie Gifford when he did (he was one of the first non-Oxbridge hires). When he was there he rubbed people up the wrong way. It was lucky that he moved Odey (it was unlucky he moved to CSAM), he wouldn't have done as well many other places, and he is terrible at marketing his fund. PTG is another example of someone who was very lucky (as far as I can tell, there appears to be little discernible logic to almost everything he does). Obviously, both are great PMs but you need to be lucky. You have to make your own luck tho.

    Cheers for your feedback, I couldn't agree more with this paragraph to be honest.

    I read that Hendry was similar at Odey in that he was confrontational, and the Newsnight appearances didn't do him any favours amongst his investors. However, I am a fan of his market philosophy.

    Like you say, there is no clear path, most people who have got there have had plenty of luck, but also are there on merit too!!

    Just out of interest from an S&T background do sales guys go over to hedge funds. E.g. from hedge fund sales at an IB, the guys with original big bet ideas.

    Thanks.
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    Mostly luck. But most importantly, don't end up in something which requires institutional level work/support as edge.

    If you are sure you want to get there, you'll have to apply yourself to the idea that you need to do important things rather than just urgent ones. Yeah, your early bosses will want you to do what you are told like build sheets and make sure various uninteresting reports are done as scheduled. But that's not the stuff which makes money at the end of the day.

    There's a substantial difference in attitude and ambition in the people. And the people are not their jobs.
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    (Original post by gangst)
    Cheers for your feedback, I couldn't agree more with this paragraph to be honest.

    I read that Hendry was similar at Odey in that he was confrontational, and the Newsnight appearances didn't do him any favours amongst his investors. However, I am a fan of his market philosophy.

    Like you say, there is no clear path, most people who have got there have had plenty of luck, but also are there on merit too!!

    Just out of interest from an S&T background do sales guys go over to hedge funds. E.g. from hedge fund sales at an IB, the guys with original big bet ideas.

    Thanks.
    Right, but if you know BG being confrontational there is a really big problem, at Odey it isn't.

    I think the role of merit depends on your goal. For some people, they just want to be right and have good ideas, they don't care about money. For other people, it is about making money and building a business. If you want to make money you need "soft" skills and you have to be able to get on with people. The best example is someone like Burry, good ideas don't matter if you act like a sneaky ****. This is something that is heavily understated in the "pop" account of HFs, esp. ones that focus on macro, the suggestion is always that you need the best "ideas" to succeed which is somewhat questionable. Clearly, there is massive selection bias with most books. You see the most successful, most lucky guys. The Lars Krojer book is the only one that captures the flipside of the industry.

    I presume your referring to Lippman when your talking about salesman, I doubt that is a common path.

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Updated: July 19, 2012
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