Can someone explain to me the appeal with Big Long Only funds (Fidelity, T Rowe)? Mutual fund outflows are only increasing and these big players have massive enterprises that need to get skimmed down. I understand the career is cushy, but I struggle with squaring that with the long term outlook
I get the Argument can be made about HFs as well, but at least the upside is a bit more material
I am just curious here for thoughts and perspectives so thanks in advance
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Comments (36)
For one it's actual investing, not the speculation game that Citadel/P72 plays. Also if you end up at a fund with a history of outperformance, especially during the 2010s, you'll learn a lot. Important to filter out the RCGs of this world with horrible performance and try being at the funds where the people leading it are genuinely smart and thoughtful investors that adapt to changing market environments.
So 6 folks are triggered cuz they think what they do at Citadel/P72 is actually INVESTING?
It's just an ice cold take... Analysts at P72 and Citadel don't "speculate". They combine rudimentary data processing with basic fundamental analysis to come to obvious conclusions but I wouldn't call that "speculating". BTW, I'm not demeaning their skill set at all I just think the analyses they run aren't what makes their job difficult, it's more like the mental toil & avoiding blunders & thinking through risk properly.
What is "actual investing"? Does it only include long term "buy and hold"? Do you think Peter Lynch or Buffett wouldn't take an arb if they saw one available?
Positive features from prospective analyst's perspective:
Negative elements:
An Analyst seat at Wellington, T Rowe, Fidelity, Capital Group is still one of the best gigs on wall street and probably the single highest probability path to a $20mm net worth by the time you're 50 in the game.
Excellent descriptions above
Fidelity is better than D&C, Harris Associates etc.? Wow
Don't know Harris well, but D&C is a better seat than T Rowe and Fidelity due to higher comp and better culture, respectively.
lmao where did I say that. The 4 I mentioned are just the biggest 4, listed in no particular order. I'm not close enough with that space to know the relative strengths and weaknesses of those firms.
Thoughts on the fixed income focused ones like PIMCO? Or the smaller ones like NB?
Also interested in some that take experienced hires (I.e. select equity) in how they compare to big LO shops. Also if there are others like select in terms of being LO + background of investors
Definitely also feeling the fee compression + rough couple years for fixed income but they're doing a huge push into alternatives and they have 80 MDs/Partners that split 30% of the firm's profits so on average $5mm+ each.
I have noticed that the model is a lot more traditional in the sense that you need to put in your time. However, don't you think that (assuming you start as an analyst at 25) 15+ years to run your own product is too long of a timeframe?
Most analysts come out of MBA programs at ages 29-35. If you go associate to analyst, you probably could be running a product by your mid 30's. Still, a far cry from being at a L/S and getting a 7 figure bonus at the age of 26, which is not unheard of.
I'd echo the above. Most people come in as analyst in the 29-30+ range usually from MBA programs. I'd say the road to managing capital at a classic fund like Fidelity is close to 10-15 years of proving yourself as a analyst. It makes sense too, why would they trust somebody with less experience to manage billions of pure beta exposure. Positioning and risk adjust is one of the most important things required to succeed as a PM and somebody with less than 10 years of experience just doesn't have as much PM exposure or understanding diversified industries.
Thoughts on LO AM in the context of AI replacing/limiting junior associate roles. How does that change the path to get to these analyst seats?
Doesn't affect analysts. I think it will decimate associate ranks. Analysts still required as the go to contact for names and for the PMs to blame haha.
In my opinion it doesn't. You still need juniors to ultimately fill the pipeline of seniors. The job is an apprenticeship.
While not entirely apples to apples...I'd point to outsourcing of IB and MBB tasks to India. In the early 2000s (I'm sure there posts on here) people were saying those seats were going to crush analysts classes. They didn't. If anything it will likely just make juniors more efficient with time to do more analysis.
Fairly obvious what the appeal is:
- Make very good money with decent career stability, interesting job (actual investing, researching companies), OK WLB.
- You won't get fired if one PM loses money or decides he doesn't like you (unlike MM HF).
- There are headwinds for the industry, but T Rowe will be around far, far longer than the median HF career.
Grew up with a parent at one of the big LO shops (Fidelity, Wellington, etc) so can offer some perspective on the pros -
Cons: you have to go through an expensive MBA
Definitely have to get your CFA. The need for a MBA seems to be somewhat variable.
Yeah it puts you on a path to $5m+ / year, but you need to pay $150k upfront.
And you say you're good at investing?
Your reasoning could only be valid if :
1) everybody could enter/pay a $150k MBA program
2) all MBA students could integrate a top LO fund right after the program
3) all analysts/PMs integrating a top LO post-MBA would be guaranteed to make at some point $5m+/year
4) the money you spend today has the same value than the money you'll potentially earn in decades
Lots of discounting factors "MMPM" but yeah !
How feasible is it to go directly from PE? Curious because I've only seen former PE folks joining after MBA
The best funds have the MBAs as their main pipeline. If you're an Associate in PE then you shouldn't be afraid of investing in an MBA program.
Bump
No other industry where you are literally paid to underperform.
Damn you rlly did them like that 😂
Literally every public company CEO….
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