Insider Advice on Investment Banking to Hedge Fund

When I recruited for the buy side as an investment banking analyst, I thought it would be fairly easy. After all, everybody said that investment banking was the best career path to a hedge fund. After going through the process, however, I can say from experience that there’s no easy way to the buy side. Not even for investment banking to hedge fund.

Today, we speak to an industry veteran who has done it all: engineering, investment banking, family office, hedge fund, and mutual fund. Very few people have this level of insight on how to get to the buy side by making multiple career transitions.

Needless to say, a lot of networking and career planning was involved. We’ll talk go over this person’s career in detail: networking, recruiters, nature of work, the difference between investment banking and hedge fund, and whether it was worth it.

This is part 1 of our candid conversation. In part 2, we’ll cover the difference between working at a hedge fund vs. mutual fund.

The (Long) Road from Investment Banking to Hedge Fund

Buyside Focus: Tell us your career story. What do you do now, and how did you get to where you are?

Sure. I went to college in New York and majored in engineering. I was into my major, but after a couple finance classes, I was hooked on investing. I joined the student investment club there and had a great experience. As a group, we pitched stocks to each other and invested real money in the student portfolio.

Engineering to Investment Banking

In my junior year, I recruited heavily for a summer internship in finance but wasn’t able to get one. Because of my engineering major, interviewers didn’t think I had enough finance classes under my belt.

So I worked for a bulge-bracket bank in their IT department over the summer. During that time, I networked with alums as much as I could. I also networked with my peers who were doing investment banking internships at the time. I scheduled a lot of informational interviews and got a first-hand account of their experiences. We stayed in touch after, which helped to connect me to more relevant contacts.

In my senior year, I recruited full-time for investment banking and landed an offer in a 3-year rotational banking program.

I spent a year there in the firm’s healthcare group but ultimately switched to another bank. Healthcare coverage wasn’t ideal for me, especially given that I majored in engineering.

I switched over to the technology coverage group at another bulge-bracket bank and stayed there for 4 years, including my promotion to Associate.

Investment Banking to Family Office

A lot of senior bankers in my group left during the economic downturn to join other boutique firms. At that point, I re-evaluated my career options and began seeing this as a perfect time to move to the buy side.

I took an offer at a family office focused on investing in small-cap technology stocks. The firm prided itself for building strong relationships with management teams and understanding the technology know-how.

Especially in the small-cap space, there are a lot of inefficiencies in the market pricing of stocks. These companies aren’t well-researched and illiquid. That created many investment opportunities.

Family Office to Hedge Fund

I stayed at the family office for a year covering mostly small-cap names under $1 billion market cap. When I was at a conference, I met a senior analyst at a hedge fund and began to talk about a stock we had both invested in. It was a very topical stock at the time. We talked and stayed in touch after the conference.

One day he called me up and told me that his fund is looking for an analyst. So that was an opportunistic inbound call. I applied and I got the position. That’s how I got into the hedge fund.

So for me, it wasn’t a typical path of 2 years in investment banking, 2 years in private equity, and then onto a hedge fund.

My career trajectory was not as cookie cutter as the typical investment banking analyst.

I worked at the hedge fund for 4 years covering technology and consumer. Unfortunately, the founder passed away, and the fund hasn’t done very well since then.

Earlier this year, I went back into the recruiting circuit and found an opportunity at a long-only asset management firm. That’s where I am now.

Buy Side Networking

Buyside Focus: Let’s go back to your transition from investment banking to the family office. You did that when you were an Associate, which is a little late to make the transition. How did you approach networking? What did you do that was effective?

Recruiters at that point were somewhat helpful. They prefer someone with a blank slate, someone who’s more junior. Once you are an Associate, they feel that you are more set in your ways and less moldable.

So that’s why it was more difficult for me. But the recruiters did show me good opportunities at several big funds. These large hedge funds have constant revolving doors. New teams are always forming at these multi-manager funds, and they are always out there looking for junior talent.

I also tapped my own network among my friends who have moved to the buy side. So I got my first buy side job by the virtue of making contacts on the buy side and keeping in touch with them.

When they hear about buy side opportunities, they would put me in touch with fund managers. That’s how I found the family office job, through my own networking.

From my experience, if you are beyond your second year in investment banking, you would need to rely heavily on your own network to switch to the buy side.

If you want to stay in investment banking, the jump from one bank to another is easy. When I moved from one bank to another, there were a lot of sell-side opportunities for me to switch to.

But after 5 years in investment banking, I thought it was enough for me and I was ready to move on.

Networking vs. Recruiters

Buyside Focus: Did you get more opportunities through recruiters or through networking? Were recruiters helpful?

For me, networking was much more helpful. A lot of times when you go through recruiters, you are just one page among a book of resumes. It’s hard to stand out. Even if you get an interview through a recruiter, having someone on the buy side who’s able to vouch for you is extremely helpful.

As you get more experienced in your career, it’s much better to build your own network than to rely on recruiters. Even as you get to the last interview round through a recruiter, the hiring fund is tapping its own network to fact-check you. Funds (esp. long-only funds) want to make sure they are hiring the right fit for the long-term. They avoid having to replace new hires quickly.

In my conversation with friends, a lot of my friends who have moved to the buy side relied heavily on their own network as well.

The Difference between Investment Banking vs. Hedge Fund

Buyside Focus: What were the biggest surprises working at a hedge fund vs. in investment banking?

In investment banking, for the first few years as an analyst, you would be just processing information. You aren’t developing investment ideas yet. Most of the work is about editing powerpoints, building company models, and doing financial analysis. It could get mind-numbing after a few years.

From Excel Monkey to Decision Maker

In terms of coming out with original ideas and coming to conclusions, it takes a while to be able to do that in investment banking. Even as an Associate, you’d still be mainly responsible for client presentations. It’s formulaic and there’s little opportunity to think outside the box. As you reach the VP level, you would begin to shift the focus on developing client relationship and thinking strategically of ideas to pitch.

Comparing that to being on the buy side. When you are at a hedge fund, you would play a much more proactive role in identifying attractive investment ideas at the junior level. You learn much more quickly about the process of developing investment conclusions.

Buyside Focus: So the opportunity to proactively propose and develop ideas was the biggest difference between working at a hedge fund vs. working in investment banking.

More Learning Opportunities

That’s the biggest difference. Another difference is the sector coverage. In investment banking, you’d be looking at one to two companies at a time within a specific sector. At a hedge fund, depending on your role, you could be looking at multiple ideas across two to three sectors. And if you are a generalist, you could be looking at different industries, geographies, and types of businesses.

For me personally, I went from covering technology at an investment bank to covering technology, retail, and China at my last hedge fund. My coverage universe got a lot broader. It was great, I learned a lot about new companies and industries.


That was a long path to get to a hedge fund. However, this is far from the end of the story.

In the next part of the conversation, we’ll go into the details of working at a hedge fund vs. mutual fund. We’ll cover the lifestyle, investment process, hours, stress, and compensation. Stay tuned!

What are your questions about making the transition from investment banking to hedge fund? Post your questions below and we’ll get right back to you.

Author Kelvin Jiang, CFA

Kelvin Jiang has a decade of investment experience in public equities, private equity, distressed debt, and leveraged finance. His journey spans across Calamos Investments, Thornburg Investment Management, CHS Capital, and J.P. Morgan. Throughout his career, Kelvin has screened and interviewed candidates extensively for the buy side. Kelvin earned an M.B.A. from the Kellogg School of Management and graduated magna cum laude from Columbia University. He is a CFA Charterholder. In his spare time, Kelvin is an avid commentator on NBA trade rumors and Oscar-worthy performances.

More posts by Kelvin Jiang, CFA

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