I am a Quant with experience on both the buy-side and sell-side firms. AMA

[quantguidance]

Hi all,

We had a few AMAs in this community and I was hoping to give my perspective on things as well.

Who Am I: I am a quant, mainly focused in Commodities. I have spent 7+ years working in one of the top 5 sell-side firms across New York and London. I am now working for multi billion dollar hedge fund for the last couple of years. I chose my MFE program based on recommendations/rankings from QuantNet.

About My Company: A multi billion $ hedge fund trading across various asset classes and horizons.

Why Am I doing this: I have had many mentees reach out to me for guidance with interviews/CV prep/generic questions about the industry. There is generally a perceived lack of information on how to be better prepared to get good universities/internships/full time jobs. Thought this would be my opportunity to give back to the Quantnet community.

Ground rule: Similar to the other AMAs, as long as there are no questions that can be sensitive information, I am open to answering. I am not going to recommend specific schools or programs.

 

[zephyrus]

Thanks for doing this!

I'd like to know two things.

1) In your day-to-day work as a quant which skill comes in more handy? your advanced math/statistics knowledge from MFE or your fluency with tech (coding ML models/strategies, etc.). Asking this since have read a lot about shifting focus to tech from math in quant industry here on Quantnet. A follow-up on same line of thought - what areas do you think MFE programs today lack in teaching students?

2) Does holding a PhD provide any advantage to folks in the industry over MFE folks? especially in QR roles.

 

[Eric Kopen]

Hello, I am curious as to how you went about your job search during/following your MFE. More specifically, did you secure an internship during your program? And when applying for internships/full time jobs, did you cast a super wide net for different quant related roles in sell-side or buy-side or was it more focused on a few openings?

 

[kombuchalover]

Thank you quantguidance for doing this! I have a couple of questions….

1) reflecting on your position in life before you attended graduate school, what would you have done to better prepare yourself for quant research interviews/jobs?

2) branching off that question, what skills do you think a qualified candidate should possess for a quant research internship interview? Coding skills, math skills, financial knowledge etc.

3) In your opinion, how much does university brand name/reputation matter within the industry? For example, does an Ivy League/other prestigious university math degree have higher weight than a math degree from US state university? And if so, how significant is the prestige of the university weighted in comparison to hard quant skills?

 

[QuantCoach]

1) How do you avoid burnout at buyside firms with heavy grind culture like Citadel where all your coworkers are really smart, efficient and still put in 12 hours+ everyday
2) Salaries for new grads and interns in the buyside have exploded over the recent years, where Jane Street, 5 Rings, OMC are paying 300k in base itself and several firms are paying 500k+ TC for new grads, and internship packages are ~60k for 10 weeks. This is probably a 1.5-2x increase compared to just 5 years ago. Do you think the explosive growth in new grad salaries are going to continue or have they plateaued.
3) Do you ever get in the state of a mild existential crisis where you lose your sense of purpose; if all your life you've been working hard to chase after the best schools, best grades, best jobs, does it feel empty to you as well once you achieved all of it. Everyone always glorifies the $$$ in quant but do you not feel much once you actually get it - think it's called hedonistic adaptation.

 

[quantguidance]

Thanks for doing this!

I'd like to know two things.

1) In your day-to-day work as a quant which skill comes in more handy? your advanced math/statistics knowledge from MFE or your fluency with tech (coding ML models/strategies, etc.). Asking this since have read a lot about shifting focus to tech from math in quant industry here on Quantnet. A follow-up on same line of thought - what areas do you think MFE programs today lack in teaching students?

2) Does holding a PhD provide any advantage to folks in the industry over MFE folks? especially in QR roles.

Great questions! Here you go:
1. A quant role is a very broad spectrum.
a. On one end of the spectrum, we have roles which are heavy in Math/Statistics/Stochastic Calculus. These roles would be crucial for exotic derivatives trading desks as an example.
b. On the other end of the spectrum, we have roles which are heavy in Tech/Coding/ML etc., These roles would exist in Algo trading firms where there is a necessity for low-latency trading or when building large scale distributed systems to compute real-time risk, PnL etc.,
Most of the quant roles would like somewhere within the spectrum above and would be dependent on
i. The style of trading and the trading desk the quant is associated with - Exotic and low-volume desks have a need for (a) type quants more, whereas Flow and high-volume desks have a need for (b) type quants more
ii. When a desk/fund is setup, there is more necessity for (a) type quants as pricing models etc., are built from scratch. Over time, the needs of the desk/fund would evolve towards more of a (b) type quant.
iii. An algo trading fund for example would need more of a (b) type quant because of the amount of data available and the necessity for low latency trading

In funds with smaller head count, a quant is expected to possess a good mix of (a) and (b) type skills and is expected to be a problem solver. That being said, I do see the center of mass shift from (a) type roles to the (b) type roles. It is evident in the number of roles that specifically need a strong technical background of C++, which is crucial for low latency development.

I do feel that the MFE programs spend >80% of their focus training students to the (a) type of quant roles. I do see the programs shifting their focus in the future to also focus on the (b) type of quant skills. MSCF program at CMU is one such example.

2. It would be dependent on what industry the PhD focuses on. A PhD in Statistics/Applied Math for example might be something exotic trading desks would be interested in. The candidate is still expected to possess a mix of Math/Statistics/Finance and CS background

 

[quantguidance]

Hello, I am curious as to how you went about your job search during/following your MFE. More specifically, did you secure an internship during your program? And when applying for internships/full time jobs, did you cast a super wide net for different quant related roles in sell-side or buy-side or was it more focused on a few openings?

I secured an internship on the sell-side during the program. The firm had a structured summer internship program that pretty much everyone in my class applied to. I got shortlisted after a couple of rounds of written tests.

Given the amount of competition to most of the roles out there, my two cents would be:
a. Referrals/Networking go a long way in securing an interview. It would not guarantee an internship/job, but it can get you into the interview room.
b. Each opening typically has 100s of applicants, so it becomes a numbers game at some point. The more number of jobs/internships you apply for, the higher is your chance to get an interview
c. The first internship/job after MFE is almost always the hardest one to secure (primarily because of the competition). Once you secure something (which might not be your top preference), you can always consider switching internally to a more-preferred role if you want or gain experience over time

 

[quantguidance]

Thank you quantguidance for doing this! I have a couple of questions….

1) reflecting on your position in life before you attended graduate school, what would you have done to better prepare yourself for quant research interviews/jobs?

2) branching off that question, what skills do you think a qualified candidate should possess for a quant research internship interview? Coding skills, math skills, financial knowledge etc.

3) In your opinion, how much does university brand name/reputation matter within the industry? For example, does an Ivy League/other prestigious university math degree have higher weight than a math degree from US state university? And if so, how significant is the prestige of the university weighted in comparison to hard quant skills?

1. More practice and More prep. I had zero idea what to expect going into the interview room, so having a few mock interviews etc., might have come in handy

2.
i. The first topic that can make or break a successful interview is CV preparation. My advice would be:
a. Take any point in your CV from any project/work experience. You need to be able to speak about it for 5 mins.
b. Take any point in your CV from any project/work experience. Try to anticipate 5 questions based on that point. Ex: How did you improve/speed up something? By what factor? Why was it done in a certain way or not any other way? What were the advantages/drawbacks? What would be the next steps?
ii. Most of internships/jobs now have a mandatory phone screen &/or programming screen. To be able to clear it, you need to fully comfortable with programming and the most popular algorithms. The phone screen is typically CV based a couple of puzzles/brain teasers to assess fit.
iii. In the interview room itself, it would be very dependent on what the interviewer is comfortable asking. But by the end of all the rounds, you would be tested on all of Math/Finance/Stats/CS/Brain Teasers/Markets, so would need to be prepared with pretty much everything

3. In my opinion, it would matter only for your first job/internship. 3-5 years down the line, what matters more is the skills that you gained in your first job and how they can be translated to your next job. I have seen cases where some firms prefer to have excellent grades, which is seen as an indicator of smartness/hard work, irrespective of the school

 

[quantguidance]

1) How do you avoid burnout at buyside firms with heavy grind culture like Citadel where all your coworkers are really smart, efficient and still put in 12 hours+ everyday
2) Salaries for new grads and interns in the buyside have exploded over the recent years, where Jane Street, 5 Rings, OMC are paying 300k in base itself and several firms are paying 500k+ TC for new grads, and internship packages are ~60k for 10 weeks. This is probably a 1.5-2x increase compared to just 5 years ago. Do you think the explosive growth in new grad salaries are going to continue or have they plateaued.
3) Do you ever get in the state of a mild existential crisis where you lose your sense of purpose; if all your life you've been working hard to chase after the best schools, best grades, best jobs, does it feel empty to you as well once you achieved all of it. Everyone always glorifies the $$$ in quant but do you not feel much once you actually get it - think it's called hedonistic adaptation.

Very interesting questions..

1. I have been lucky enough to not experience it. The key for me has been to switch between roles and firms so that things always remain interesting
2. In my opinion, competition for excellent talent is what is driving the grad salaries at the moment. Ultimately, what matters is how much an individual is worth to a firm. I do see grad salaries plateauing in the future, but the salaries for experienced top performers continuing to explode
3. Again, have not experienced it so far, so can't comment much on it I am afraid

 

[Andy Zhang]

1) What kinds of commodities do you focus on? Do you do any energy, e.g., financial transmission rights (FTRs)/congestion revenue rights (CRRs)?
2) Do you look at commodities from a pure fundamental perspective, pure quantitative perspective or a quantamental perspective?

 

[quantguidance]

1) What kinds of commodities do you focus on? Do you do any energy, e.g., financial transmission rights (FTRs)/congestion revenue rights (CRRs)?
2) Do you look at commodities from a pure fundamental perspective, pure quantitative perspective or a quantamental perspective?

1. We mainly trade Crude, Natural Gas, Emissions and Oil Products. In terms of securities, we are primarily focused on vanilla futures and options to express the market view.
2. Our firm is very strongly fundamental research based, so we look at a lot of supply/demand and fundamental shifts in the market behaviour

 

[wassupquants]

quick question regarding transition from sell side to hedge fund
1) what made you decide the switch from sell side to hedge fund?
2) what kind of advice would you give to ppl who are in sell side right now and willing to apply for buy side quant firms (ex. how to prepare, what to expect)

 

[quantguidance]

quick question regarding transition from sell side to hedge fund
1) what made you decide the switch from sell side to hedge fund?
2) what kind of advice would you give to ppl who are in sell side right now and willing to apply for buy side quant firms (ex. how to prepare, what to expect)

1. A few reasons
i. Change of scenery, I was doing the same thing for close to 7 years and so wanted a change as I had saturated in terms of learning
ii. The profile in my new firm was much more market-facing and desk-facing, which excited me
iii. Hedge funds in general tend to run much leaner teams, which means that the breadth of the skillset that you gain is much more
2. Based on what I mentioned above, you are expected to be way more versatile and broad skill based when applying for buy side firms. In terms of preparation, expect to be tested on pretty much everything quant based - Algos, Brain teasers, Stochastic Calculus, Probability, Finance and Statistics. You are expected to be a jack of all trades and will be tested accordingly

 

[chezzay]

Hi, thanks for this!

1. In the sell side were you working as a quant or in S&T?

2. Regardless of the answer to question 1, I recently spoke with a Citadel trader and they previously worked in S&T (trader) for many years. They mentioned that it helped a lot in the way that they got familiar with liquidity and "the streets". Do you think you would agree/say that working in S&T/sell-side in general is helpful in pivoting to a quant hedge fund?

 

[quantguidance]

Hello,

1. I was a Quant on the sell side.
2. I partially agree with the Citadel Trader. By being a part of Sales and Trading, you get to form a network of market players across different firms. You will get to learn a lot and get familiar with the intricate aspects of the market. I don't think it is necessary to be an S&T on the sell side for this to happen. The traders I work with on the buy side have gained a lot of familiarity with different aspects of the market, how different market players work, how they trade etc., All of these would be super helpful to pivot into a quant hedge fund in the long term