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secret2
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Posts: 301
Joined: July 28th, 2010, 10:29 pm

Comparison between different career options

April 19th, 2018, 2:16 pm

I've been working for a bank as a quant, and recently for a couple of reasons I am thinking about a change.

I see that there are three types of "buy side" roles in the market (the term being used in a generous sense): quant hedge fund, prop market making firm, and some of the remaining prop desks within some banks. My question is, how do they compare against each other in terms of
- up side
- down side (chance of going ruin/getting sacked)
- reemployability (is the exposure broad enough?)
- any other comments welcomed
 
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bearish
Posts: 3012
Joined: February 3rd, 2011, 2:19 pm

Re: Comparison between different career options

April 19th, 2018, 8:32 pm

secret2 wrote:
I've been working for a bank as a quant, and recently for a couple of reasons I am thinking about a change.

I see that there are three types of "buy side" roles in the market (the term being used in a generous sense): quant hedge fund, prop market making firm, and some of the remaining prop desks within some banks. My question is, how do they compare against each other in terms of
- up side
- down side (chance of going ruin/getting sacked)
- reemployability (is the exposure broad enough?)
- any other comments welcomed


I have nothing useful to contribute on your question, narrowly defined, but you seem to be leaving out most buy side quant jobs. Those would be found in more or less traditional asset managers whose end products are mutual funds, institutional separate accounts, ETFs, and some international equivalents (like UCITS). The focus is not on trading algos (which may be your definition of quant), but rather a quest for alpha or, failing that, at least smart beta, along with all manners of fixed income analytics, equity factor models, and a variety of other research/modeling work of a risk management flavor. Think Blackrock, Pimco, AQR, etc.
 
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secret2
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Posts: 301
Joined: July 28th, 2010, 10:29 pm

Re: Comparison between different career options

April 20th, 2018, 1:18 am

bearish wrote:
secret2 wrote:
I've been working for a bank as a quant, and recently for a couple of reasons I am thinking about a change.

I see that there are three types of "buy side" roles in the market (the term being used in a generous sense): quant hedge fund, prop market making firm, and some of the remaining prop desks within some banks. My question is, how do they compare against each other in terms of
- up side
- down side (chance of going ruin/getting sacked)
- reemployability (is the exposure broad enough?)
- any other comments welcomed


I have nothing useful to contribute on your question, narrowly defined, but you seem to be leaving out most buy side quant jobs. Those would be found in more or less traditional asset managers whose end products are mutual funds, institutional separate accounts, ETFs, and some international equivalents (like UCITS). The focus is not on trading algos (which may be your definition of quant), but rather a quest for alpha or, failing that, at least smart beta, along with all manners of fixed income analytics, equity factor models, and a variety of other research/modeling work of a risk management flavor. Think Blackrock, Pimco, AQR, etc.

Thanks for sharing your opinions. If by 'algos' you mean HFT then no, I would not restrict myself to algos type jobs. But I do find that there are two problems with what you mentioned:
- The kind of firms you described tend to be behemoths, which greatly reduces the upside potential;
- I have actually had a short gig with one of the 'traditional asset managers' (think Templeton). The quant teams there, if they are a thing at all, occupy a really marginal position. As a result they are also paid peanuts.
I guess these are the reasons I unintentionally left out this section in my original post.
 
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bearish
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Joined: February 3rd, 2011, 2:19 pm

Re: Comparison between different career options

April 20th, 2018, 2:00 am

Much comes down to the definition of "peanuts". If your non-peanut target is seriously into the seven figure range, then yes, you better find a generous hedge fund and hope you can contribute. If it is mid six figures, the story is very different.
 
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secret2
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Joined: July 28th, 2010, 10:29 pm

Re: Comparison between different career options

April 20th, 2018, 2:08 am

Interesting, that's quite different from the information I have. I suspect that even low six figures is hard to achieve at those places.
 
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bearish
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Joined: February 3rd, 2011, 2:19 pm

Re: Comparison between different career options

April 20th, 2018, 11:05 pm

As the saying goes, YMMV. My frame of reference relates to high performing PhDs with (at least) a few years of experience in the US market. Since they do (or, in some cases, did) work for me, I know their comp. Additionally, most firms rely on one or more benchmarking surveys (we use McLagan's), so I know we are not out of line relative to the peer group. 
 
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miquant
Posts: 36
Joined: March 16th, 2007, 8:07 pm

Re: Comparison between different career options

April 23rd, 2018, 1:30 pm

bearish wrote:

I have nothing useful to contribute on your question, narrowly defined, but you seem to be leaving out most buy side quant jobs. Those would be found in more or less traditional asset managers whose end products are mutual funds, institutional separate accounts, ETFs, and some international equivalents (like UCITS). The focus is not on trading algos (which may be your definition of quant), but rather a quest for alpha or, failing that, at least smart beta, along with all manners of fixed income analytics, equity factor models, and a variety of other research/modeling work of a risk management flavor. Think Blackrock, Pimco, AQR, etc.

Hi bearish,
I am a traditional front-office quant and don't understand very well what is this quest for alpha or beta that you are talking about in this answer, could you please point me out a paper of reference to understand those terms.
Thanks a lot !!!
 
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ppauper
Posts: 66634
Joined: November 15th, 2001, 1:29 pm

Re: Comparison between different career options

April 23rd, 2018, 3:34 pm

they're to do with the performance of stocks
There's an old saying, "Keep your alphas high and your betas low"
beta is a measure of the correlation with "the market," usually an index.
If a stock has a beta of 2, you expect the stock to go up 20% if the index goes up 10%
If a stock has a beta of 0,5, you expect the stock to go up 5% if the index goes up 10%

alpha is a measure of the performance of the stock relative to the index.
 
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bearish
Posts: 3012
Joined: February 3rd, 2011, 2:19 pm

Re: Comparison between different career options

April 23rd, 2018, 8:31 pm

miquant wrote:
bearish wrote:

I have nothing useful to contribute on your question, narrowly defined, but you seem to be leaving out most buy side quant jobs. Those would be found in more or less traditional asset managers whose end products are mutual funds, institutional separate accounts, ETFs, and some international equivalents (like UCITS). The focus is not on trading algos (which may be your definition of quant), but rather a quest for alpha or, failing that, at least smart beta, along with all manners of fixed income analytics, equity factor models, and a variety of other research/modeling work of a risk management flavor. Think Blackrock, Pimco, AQR, etc.

Hi bearish,
I am a traditional front-office quant and don't understand very well what is this quest for alpha or beta that you are talking about in this answer, could you please point me out a paper of reference to understand those terms.
Thanks a lot !!!


Here is one perspective: https://www.aqr.com/Learning-Center/Alt ... loser-Look
 
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secret2
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Joined: July 28th, 2010, 10:29 pm

Re: Comparison between different career options

April 25th, 2018, 1:21 am

Beta ~= 'Institutionalized Alpha'
Before the premium can be 'explained', it is an anomaly (alpha). Eventually it gets explained away as the reward for risk loading (beta).
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