SIM-UOL fresh grad starting pay

to be honest.. i got a number of friends in fo of hedge funds too.. and they know tht most analyst do not become portfolio manager.

im sry abt BL model.. what i wanted to say is tht what we learn in sch was nv used and a most portfolio construction from funds i know had moved from MPT, marko to smth else.

being a pm requires years of honing in maths, financial mkt experience and asset class knowledge.. actually private U can do it too.. it takes abt 10plus to 20yrs

Originally Posted by Unregistered

being a pm requires years of honing in maths, financial mkt experience and asset class knowledge.. actually private U can do it too.. it takes abt 10plus to 20yrs

I actually never understood what PM must know a lot about asset class knowledge, as you quoted. Financial markets and math, I agree. But hear me out.

You know that funds are divided into strategies. Won't a PM in a fund that trades currencies just need to know all about the asset class of currencies? Why should he need to know a lot about commodities, equities and bonds (c, e, b). Sure, he of course needs to know about the other three asset classes, but certainly not 10 years of knowledge worth of (c, e, b).

Given how investing is now done with a myraid of instruments, I dare say that the PM who specializes in just currencies will perform better than the PM who has 10 years of knowledge of everything.

I think a PM can be respectable if he know all the topics in that one asset class - monetary policy affecting currencies, central banks motives, technical analysis, OTC market microstructure for trading currencies, currency options. Why bother honing skills in (c, e, b). He sees where interest rates are trading and then trade EURUSD. He doesn't need to know how to price interest rate swaps, presumably what he'll learn in the 10 years. Besides that's why you pay the banks to do that for you.

Too much knowledge might even paralyze your investment decisions. For example, if I was going to invest in a currency, I should do 80% analysis on currencies and 20% everything else, as opposed to 25% each analyzing currency, equities, commodities, bonds.

Would you rather be director at Citibank or portfolio manager with a $500m portfolio?

Come boys, let's answer.

Originally Posted by Unregistered

Would you rather be director at Citibank or portfolio manager with a $500m portfolio?

Come boys, let's answer.

Whichever pays more. $$$ talks.

Originally Posted by Unregistered

Whichever pays more. $$$ talks.

Back to the same buyside higher bonus, sell side higher base argument. I'm speculating here, but I'll go with:

Executive Director at Citi: $250k base. $100k to $200k bonus.
Portfolio Manager at $500m fund: $180k base. $100k to $300k bonus.

For the PM, let's say he does a 5% return. With fund model of keeping 20% of profits, the fund will get 0.05 * 0.2 * 500m = $5m.

Fund manager keeps 50%, so $2.5m spread between PM, analyst, etc. You see bonus of $300k to PM can be paid.

Which one would you like to be?

being a pm is like being a successful businessman.. thr is uncertainty and many ppl dont make it thr. eventually most of my friends realised they r happier whr they r.

y PM need to know every facet of finance?
i) buy hk stocks
ii) hedge hk or cny with cnh forward/futures
iii) the swap pts incurred can be changed into a floating
iv) instead of closing the position mths down the line.. i can buy an option which will incur some premium, which my profit may be able to cover.
v) nw delta hedge the option
vi) ccy hedge the option if needed.

when interest rate moves 25bp, what is my dv01, how will it change the convexity of the bonds or loans that im holding

Originally Posted by Unregistered

Back to the same buyside higher bonus, sell side higher base argument. I'm speculating here, but I'll go with:

Executive Director at Citi: $250k base. $100k to $200k bonus.
Portfolio Manager at $500m fund: $180k base. $100k to $300k bonus.

For the PM, let's say he does a 5% return. With fund model of keeping 20% of profits, the fund will get 0.05 * 0.2 * 500m = $5m.

Fund manager keeps 50%, so $2.5m spread between PM, analyst, etc. You see bonus of $300k to PM can be paid.

Which one would you like to be?

The variable component doesn't add enough equity to make the PM role more desirable than the ED role. The ED effectively has a 350k-450k pay package while the PM only has a 280k-480k range. And granted, this may differ between departments but most EDs I see in the banks I've worked in, 90% of their jobs are attending meetings and responding to emails. There's almost no grunt work or heavy lifting required when you reach that level.

In terms of hours and energy required vs the remuneration, the ED role is a no brainer. I know that many of you will argue that you prefer the challenge and job scope of the PM role, but honestly, if you love investment decisions and managing assets, and you are reasonably successful at it, which better client to take on other than yourself? Manage your own wealth and see it grow.

Originally Posted by Unregistered

... There's almost no grunt work or heavy lifting required when you reach that level.

... but honestly, if you love investment decisions and managing assets, and you are reasonably successful at it, which better client to take on other than yourself? Manage your own wealth and see it grow.

Yup, I can agree with that. But just a few things I would like to mention.

While it is true that EDs are about meetings and formulating strategic directions, no grunt work, I'd also argue that for PMs, you are free from the grunt work IF your positions are in your favour. For example, you could do 6 months of research, form the positions based on your investment idea, and if you're right, just sit back and let the market do the grunt work. There's a saying I've learnt - "Let the market do the work". Buy at X, let the market push up the price to Y.

And before any of you flame me for saying I have zero experience on how a hedge fund trades, yes, I classifying the hedging, sizing, trade executing, trade booking, monitoring event risk as minute compared to the investment idea. One good instance of this is the SPX bull run in 2014. Had you decided on long, you're gold. And also the Crude bear run in middle of 2014.

So, as a PM, if your calls are right, you pretty much can relax for the rest of the year.

Finally, as to being your own client, it doesn't really work that way because you won't have the resources of a hedge fund. Market quality data, PhDs in research, team of 3 analysts, lowest spread execution are all only possible in a fund and not on your personal computer. And I truly believe this difference is what makes you better predict the market outcome than if you were on your own.

Originally Posted by Unregistered

Yup, I can agree with that. But just a few things I would like to mention.

While it is true that EDs are about meetings and formulating strategic directions, no grunt work, I'd also argue that for PMs, you are free from the grunt work IF your positions are in your favour. For example, you could do 6 months of research, form the positions based on your investment idea, and if you're right, just sit back and let the market do the grunt work. There's a saying I've learnt - "Let the market do the work". Buy at X, let the market push up the price to Y.

And before any of you flame me for saying I have zero experience on how a hedge fund trades, yes, I classifying the hedging, sizing, trade executing, trade booking, monitoring event risk as minute compared to the investment idea. One good instance of this is the SPX bull run in 2014. Had you decided on long, you're gold. And also the Crude bear run in middle of 2014.

So, as a PM, if your calls are right, you pretty much can relax for the rest of the year.

Finally, as to being your own client, it doesn't really work that way because you won't have the resources of a hedge fund. Market quality data, PhDs in research, team of 3 analysts, lowest spread execution are all only possible in a fund and not on your personal computer. And I truly believe this difference is what makes you better predict the market outcome than if you were on your own.

Granted, fair points as well.

Originally Posted by Unregistered

Hi everyone from SIM,

i was reading the forum and just want to give a few tips as i do know how hard it is to get a finance job from SIM. I took around 4mths to find a desired finance job. it's about my 3rd yr working.

Currently, Im in a front office, dealing role in a bank. i deal with forex, swaps, FI, repos and also does market making etc... It is the department that does the fixed rate, floating rate swaps kinda thing we study.

my path basically goes like this..
trading with my own money, start studying in SIM, holiday spent proprietary trading at a legitimate firm (not 6cap), Holiday spent in private bank, grad, dealing in fund, dealing in Bank.

tips.

1) Try to work part time in bank. I didnt know it was important until people actually called me up for interview because i have work as scanner-boy in a private banking environment

2) try to pick up skills. Bloomberg, reuters, excel functions, algos, programming does help

3) prepare for interview & apply for the right job. local banks and americans are super paper chase.. i think it is fine to skip applying to them if u want front office jobs.

Interview is everything. When employers tested me on options, excel and every finance qns, they are usually beyond textbk. E.g. I was asked what are the 3 ways to form a butterfly with options.. calculate swap pts, substantiate view of usd/sgd in 1yr, number of rate hikes, taylor rule....

4) i do not wish to encourage paper chasing but sadly CFA and Masters do help. All my colleagues have master degree.

And in regards to trading, let me clarify a few pts:

i) proprietary trading firm do exist.. but i advise u to trade 2yrs, 364days/yr b4 u decide to sign up.

ii) no prop trading in banks due to volcker & dodd frank. we unwind position fast.

iii) very little chance to run your own book in banks. it is a business model.

iv) buy-side punters are the most fun with highest variable bonus, but least job security and easily exploited.

FO can get about 5to6k payroll in about 3 to 5 years.

hi can u clarify on these 2 points? thanks

1. what's wrong with six capital?
2. do u advise starting off in prop trading or s&t at a bank?
3. what's yr opinion on paper trading/hedging in commod trading houses?

anyone else feel free to comment too