Who we work for, who we care about: Absolute return wherever we can find it: Hedge Funds,

Funds of Hedge Funds, Prop Desks and HFs at Broker-Dealers/Major Banks. Though it’s considered

‘alternative’ and ‘absolute return’, we don’t currently recruit for Private Equity clients; increasingly

these two industries (HFs and PE) are converging, so PE is important to grasp. Marketers and

Structurers are technically ‘sell-side’ functions in many banks; otherwise, we really can’t transition

people with no buy-side experience from the SS. Only one notable exception: a successful SS analyst

with several years of sector coverage – someone with an obvious ‘vertical carve-out’ – and only a year

or two in investment management is place-able.

 

Investment Professionals Within these Groups

Rule #1: titles matter very little – function makes the man.

Analyst – someone who covers an industry or asset class to generate trade ideas within a fund’s

mandated strategy. For our purposes, “Analyst” and “Researcher” are synonymous jobs, unless the

researcher is supporting a customer business as well or explicitly not trading (this makes the person a

“Strategist” in functional terms). May be expected to execute his own best ideas without approval or

consultation, but normally has to sell ideas internally to PMs and desk/strategy heads or Sr. Analysts.

The vast majority of investment professionals employed by HFs and Prop groups are analysts of some

sort: idea generators, sometimes with sector coverage, who model companies and have some trading

responsibilities. Functionally, a Sr. Analyst is defined by sector or strategy coverage, combining

research and analysis with trading responsibilities. A Sr. Analyst must have a P&L to be considered a

Sr. Analyst – this job is ‘desk #2’, one career step below a Portfolio Manager.

 

Trader – in common parlance “Trader” is used interchangeably with Analyst or PM depending on the

firm type: a generic description of an investment professional. For our purposes, though, a Trader is

someone responsible for executing transactions in an asset class or strategy area, handling (sell-side)

Street relationships, trade design (hedging strategy, risk monitoring, exit signals); Traders also

frequently cover the new issue market and advise on the most attractive opportunities from the

calendar; infrastructure like technology and analytics are also often within the purview of a Trader. In

smaller funds and lower-volume strategies, Trading responsibilities are typically shared by Analysts

rather than assigned to a dedicated Trader.

 

Strategist / Researcher – an industry expert (or asset class / strategy expert) who writes ‘research

reports’ or ‘investment memos’ for customers (whether internal or external). Refer to Appendix 1,

which shows the Strategist on a spectrum of ‘trading involvement’ at one far end, where the Trader is

at the far opposite end and the Analyst is somewhere in between with a hybrid of trading and research

responsibilities. A Strategist is the desk’s or firm’s ‘go to’ guy for a particular area, whether that’s a

market sector (“Energy/Utilities/Oil Services”) or a given trading discipline (“quantitative credit arb”).

The core definition of a Strategist (versus an Analyst) is that the Strategist doesn’t trade, doesn’t run

money, and is purely a research analyst. A sell-side med-tech analyst is a consummate Strategist, for

example. Qualifying question: “so you don’t put trades on, you don’t know what happens to your

ideas after you write the memo? You’re basically a strategist then, right?” It might be helpful to think

of a Strategist as a Sr. Analyst with no P&L and no trading responsibilities: both are subject matter

experts with predefined industry or strategy coverage.

Quant / Modeler – Quantitative Analysts or “Quants” and Modelers must universally have

programming skills, as their jobs are defined by accountability for cutting up and investigating

enormous data sets. Quants are usually trained as statisticians, whether from a Ph.D. program in a hard

science or a Master’s degree program in CompSci or Statistics or Computational Finance. Many

Quants have put in time as Risk Managers or Risk Analysts, in many cases having built custom

portfolio analytics, trading platforms, and high-volume order entry systems for bank prop desks.

Quants are responsible for back-testing theories, complex modeling and simulations, and often risk

analytics; in all cases a Quant or Modeler needs to have sophisticated command of some statistical,

computing, or other artificial language for creating simulated environments (and usually trading screens).

 

Marketer – In fund management, a Marketer is in fact a fund salesperson. While they’re indeed

responsible for the traditional marketing functions like communications and product development, a

fund Marketer is really the asset-gatherer who pitches high-net-worth individuals, family offices,

pension and endowment funds, Funds of Funds, and other HF investors on allocating investment

dollars to the fund. Founders, fund and portfolio managers, and other senior staff are frequently

involved in the firm’s fundraising activities, but these initiatives are spearheaded by one person, the

Marketer, who oversees the pitch process, leads management, client development, and who’s

personally responsible for prospecting, successful solicitations, and an asset-gathering pipeline. Many

sell-side jobs like Structuring are transferable into the Marketer function: HF marketers are usually

responsible for structuring transactions, just like any placement agent (negotiating contract terms,

determining the optimal deal structure, etc.).

 

Portfolio Manager – the PM role is defined by two characteristics overwhelmingly: full transactional

discretion over a book of securities; and personal P&L responsibilities. A Sr. Analyst with a carve-out

will have a personal P&L (on or off the record), but a PM’s career is defined by his portfolio returns.

His day to day job may involve developing/coding a trading system with no support, or overseeing a

team comprised of one fundamental analyst who investigates his best ideas through custom cash flow

modeling, one execution trader, and one quant who handles the analytics and risk. Whether he

oversees a team of ten analysts or none at all, the PM ‘pulls the trigger’ on investment decisions – he’s

personally responsible for both security selection and allocation size (plus, of course, successful

outcomes). No one is qualified for a PM job who has less than three years’ performance attribution in

his work history; no one is currently a PM, despite any contrary evidence, who’s not currently running

money with a current, verifiable P&L. Differing dynamics between Silo and Pyramid models can

change the equation a little, but these rules, as far as we’re concerned, are pretty simple. A Sr. Analyst

with a verifiable track record can often step into a PM role: each function involves ‘running a book’.

Founders – we could talk all day about founders, but suffice it to say that we’re unlikely to find a new

position for a Founder of a $500M or $1B+ shop. That said, it’s very, very common for a successful

PM to strike out on his own, fail to raise enough capital, then return to someone else’s employ. You’ll

frequently meet a President/CEO/Founder of a fund with $50-100M in capital who’s decided after a

lousy year that he’s not able to successfully manage a business while generating sound trade ideas –

the economics of the locked up management fee simply don’t allow it: these are potentially

employable. But successful founders who make more than $10M a year and run multiple, consistently

profitable strategies are wonderful to know, nearly impossible to place.