If you could go back in time, would you rather set yourself up to be at Jane Street / RenTech or Viking / Lone Pine / Tiger?
A lot of these quant firms (which have a variety of strategies) do earn returns that are far in excess of the index even adjusted for a factor model. In contrast, even the best single-manager long/short funds (like the elite Tiger Cubs) do not beat the index, especially when factor risks are considered. In some sense, they are a complete scam. Adjusted for risk, the elite quant firms really do 5x better than the elite long/short equity funds in terms of index out-performance. It's true that this is apples-to-oranges in some sense (e.g., these are completely different strategies investing along different time horizons with different business models), but I am not asking us to compare these strategies from the standpoint of an LP. I am asking to compare from the standpoint of a freshman in college with perfect information that seeks to optimize a 30+ year long career. This is intentionally a hypothetical question and not realistic (it involves time travel to your 20 year self!). Knowing everything you know now, would you prefer to get a job at the elite quant funds Jane Street / DE Shaw (as a quant) / RenTech or at the elite long/short funds (Tiger / Viking / Lone Pine / Coatue ) with the full understanding that one path may be more sustainable than the other?
Comments ( 13 )
Anyone not picking RenTech doesn't love money enough. Will say though Tiger Global is a close second.
Where would you put DE Shaw / Jane Street relative to Viking / Lone Pine in this hypothetical scenario where you turn back time and could do anything?
Jane street not a hedge fund.
To my understanding Jane Street is generally considered a prop shop, not a hedge fund .
I think travelling back to age 20 isn't enough to attain the quant skills that could get me a job at RenTech. More like age 10. Either way, I'd definitely tend towards the quant funds. Maybe Citadel Investment because they're larger than most and have bigger offices in Europe and Asia. When talking about a 30+ career, working in different countries is important to me.
Array
I'd go with the quant shops. You develop skills that are transferable if it doesn't work out (any tech firm would kill for Rentech talent). Long-short is a low barrier to entry business that doesn't build other skills.
As an employee in a large firm, the fund performance may not be very relevant to you. It's harder to replace a fundamental analyst with someone else that does the same job compared to a quant, so they generally get paid more over time regardless of the fund performance. I've heard the pay at Renaissance is very good but not amazing, just enough to attract and retain the former scientists they hire.
As the amount of data about the world increases, the value provided by fundamental analysts is decreasing. All that fundamental analysis has over quant is that analysts make educated guesses about companies and economies for which there is no rigorous data. Its an art. But this is changing, the value of data is now well understood, and so everyone is collecting it everywhere. Algorithms can increasingly piece together fundamental analysis, and this is only increasing. I would never bet on the longevity of fundamental analysis if I was fresh out of school
ok boomer.
Financial Modeling Training
Guide to Finance Interviews
Not really interested in the quant side (and as a CS major/former math&cs major I'm already aware of the type of subject matter so not just saying that).
Fundamental funds just require far more nuance and reasoning about unstructured information. The thing I hate the most about math/ cs is how myopic and tedious the work can get. You very quickly lose sight of broader thinking for the sake of narrow incremental optimisations Overall, just not my cup of tea.
has your view about quant evolved since the last 3 years being a CS /math major?
I'd prefer to be elite elite and marry Bill Gates' daughter. Check mate
Seriously though, is this just to debate quant vs. fundamental?
This is a dumb question. It's not so simple. The reason why the prop shop returns are so good is directly because of the people who are there, not because of the people who aren't. You don't just get to magically enjoy everyone else's success by joining these funds. If you could deliver 50% annualized at Jane Street, then you should already be delivering that at wherever you are now.
Qui libero soluta ratione amet consequuntur. Natus quis doloribus aliquid maiores soluta. Qui quia modi ut voluptate expedita odit quibusdam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...