If you want to become a quant at an investment bank or hedge fund, a traditional master’s in computer science won’t always do. Universities have responded to the high demand for quant traders and analysts and have rolled out specialized programs that combine finance, mathematics and engineering. These programs have relationships with top banks and hedge funds and often act as a direct feeder of talent. As such, getting into the right program is a critical step for anyone who wants to be building algorithms and systematic trading strategies.
This year’s short-list of universities proven to open doors for prospective engineers was just released by QuantNet, which looked at 38 master’s degree programs with specialties in financial engineering, mathematical finance and quantitative finance. They derived the rankings from placement rates, starting salaries, employer surveys, GRE scores and peer assessments, among other factors.
Princeton’s master’s in finance jumped to the top spot in this year’s rankings, overtaking New York City’s Baruch College and the University of California, Berkeley, which each offer highly-lauded financial engineering degrees. However, the same programs have made up the top five for the last two years running, just in a slightly different order. Carnegie Mellon’s computational finance degree and Columbia University’s financial engineering program are also well-known feeders of investment banks and hedge funds that rely on quants.
The top 10 programs are below, including the average starting base salary and the employment rates three months after graduation, according to QuantNet. The one obvious takeaway is that the compensation totals are far from eye-popping, though they don’t take into account signing or year-end bonuses, which can be substantial for those who are directly informing trading strategies. The average bonus for junior quants working at big-name hedge funds nears $100k, according to a recent Wall Street Oasis survey.
Students are also likely to have little work experience. At Baruch, for example, graduates had a medium of only 18 months of previous full-time employment. The head of Baruch’s financial engineering program told us that recent grads found work as quants, strats and flow traders with employers including Goldman Sachs, J.P. Morgan, Point72, Citadel and AQR.
At least one expert believes quants are still underpaid, particularly considering the investment they made with their education. Former sell-side and buy-side quant Robert Carver argues that his brethren often don’t see the huge pay packages of traditional traders because they are mislabeled as engineers and tend to have a personality where they aren’t as demanding as traditionally aggressive traders. We'll have to see if that changes as quants continue to take on a bigger role in trading strategies.
Note: Starting salary totals are rounded.
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