UK
If you want to make a packet working in hedge funds, an MBA won’t help you on your way.
At least, so says Claude Schwab, chief exec of US-based global hedge fund search firm Schwab Enterprise. Schwab studied the pay packages of 400 hedge fund managers globally and discovered that while an MBA helps inflate pay substantially in the first two years of hedge fund employment, it makes little difference thereafter.
“The median base salary of a non-MBA working as a first year analyst at an established and successful hedge fund is $85k and the median bonus is $150k,” says Schwab. “The median base for an MBA in a similar role is $135k and bonuses range from $90k to $500k.”
Schwab says the discrepancy disappears after year two. The discrepancy in the first two years is attributable to the fact that MBAs tend to have more work experience than non-MBAs, rather than anything to do with the course itself.
Meanwhile, he claims the real training ground for hedge funds has become analyst programmes at leading investment banks: “Hedge funds are looking for people who can do financial modelling and who are prepared to work hard – they know they can find them in banking.”
The head of one London hedge fund search boutique confirms hedge funds don’t rate MBAs: “A lot of funds will say they don’t want someone with an MBA because they’re looking for people with free-standing thinking,” she says.
Mega-pay within five years
Schwab’s study also reveals that some hedge funds are still making some people very rich. “We found some people who, in their fourth year as a hedge fund analyst, are making eight figures,” he says.
Predictably, median pay is substantially less exciting. “Based on the statistical median, the typical analyst with five years’ experience is pretty much at the $1m mark,” says Schwab.
Revelations of riches at top funds come as US firm Hedge Fund Research predicts that November will be hedge funds’ worst month for performance since the turn of the millennium.
I assume it is still possible to use an MBA to get a job at an investment bank and to go from there to hedge funds right, albeit a few years later?
After your first job, an MBA or most other qualifications aren’t worth squat!
MBA means Mediocre But Arrogant?
What if your first job isn’t in finance and an MBA offers the best way to secure a front office position to gain the requisite skills for a job in a hedge fund? Still worth squat?
Really? Then that would make an MBA redundat, since you need work experience to get accepted into an MBA programme in the first place…
Read the post properly Alvaro. The post clearly says if your FIRST job is not in finance…
Many people use MBA’s to change careers which is what the above post relates to.
Calm down, anonymous student upstart. I think that Alvaro was replying to David’s post.
With that level of comprehension, I think it’s best to forget about a career in hedge funds.
It’s more about skill set, hedge funds need different kinds, quant modellers are used as one of may metrics as trading aids, hungry analysts who don’t accept street’s perception but work hard to challenge it, traders who can read the tape and figure out what’s really going on etc. The latter part are the most important and less rare quality. Most of the top hedge funds are driven by traders who has hired smart driven people which assist with quant modelling, analysts who think differently and look beyond common perception. I.e. a trading skill only comes with experience, so whether or not you are MBA/PHD don’t mean squat. It’s all about personal traits.,
Most importantly,MBA or not,if at HF do not question the feudalistic attitude of your employer: remember, equity owner gets (almost) all the spoils, and investors bear most of the risk.
“…After your first job, an MBA or most other qualifications aren’t worth squat!..”
ever thought why there are no MBA’s in operations.. good luck in Bangalore…
what about rafa?
All qualifications tend to make good people better qualified and bad people poorer. Be realistic and if you believe you will benefit in any way go for it. If you are really in this for the big bucks then do whatever you need to in order to be part of the GS bonus pool!
Why is this bulletin board full of people wanting to anaonymously diss total strangers? Some people must have very sad lives to get off on this.
first 2 years, 1+ deviation salary+bonus scheme, then it equals…, mmm, maybe being an “mBA” is good for your mortgage…?, but for the big bucks? nobody knows
I wholeheartedly agree with anon, Hedge Funds. Who cares what an MBA (or not) does to the fine tuning of your salary. If you end up with this kind of mindset, you may as well top yourself because you’ve become a waste of carbon footprint.
Obtaining an MBA degree is not a gurantee that a person would be an effective hedge fund staff. Empirical knowledge and business acumen are more preferable since financial market trading, analysis and risk management require more than economic theory, financial savvy and mathematical talent. Hedge fund tasks need an individual who “thinks outside the box” or creative, innovative, highly analytical and strategic.
…and it really depends on which MBA
the floors are allready full with MBA’s, but where are the P&L’s ?
i think MBA is still a powerfull career for any professional.
As an MBA Grad I always find non MBA’s rubbishing the course. I don’t get it? Bottom line is that education is about adding tools to your (business) kit bag. It’s then about what you do with those tools. Generalising is very dangerous or should I say short sited. On our course we had Doctors, Lawyers, Accountants, Financiers, Marketers, etc. Some of them talented, and some of them less so. Do you think they all came out of the MBA the same? No, they are still Doctors, Lawyers, Accountants, Financiers, Marketers, etc. but only now they have an MBA (i.e. a few more tools). Post MBA I set up my own business and found these tools very useful. Each to their own. Do an MBA if you think it add value to your career / life? If not, don’t rubbish something you have not done.
I found MBAs reporting to me as associates or analysts as nothing else but expensive analysts just with only a fraction of an analysts’s experience. Relevant work experience and a creative restless mind count many times more than an MBA