There may be no better time than the present to be a quant. Hedge funds and banks are not only hiring PhDs right out of school to research and mine datasets, but also to build algorithms and strategies that directly inform trading decisions. More quants inch toward the front-office every day.
When it comes to quant pay, the spectrum is rather wide. It all depends on whether or not you’re considered a 'revenue-generator'.Either way, salaries are increasing across all experience levels as competition heats up. “Everyone is hiring,” said one hedge fund researcher at the recent Quant Conference in London.
A new report from Wall Street Oasis provides a bit more clarity. The average base salary for quants and engineers at top algo-focused hedge funds was $163k in 2018. With a near $100k average bonus, year-end total compensation for a typical quant is north of $260k. That number is likely set to increase substantially as the survey ran throughout 2018 and included bonuses earned in 2017 that were paid out earlier this year.
The survey took into account self-reported base salaries and bonuses from quants at five well-known hedge funds: Millennium Partners, Citadel, Two Sigma, Man Group and D.E. Shaw. The number of respondents from each firm was too low to make any assessments about one particular hedge fund, but the combined data was statistically significant. In fact, when it came to base salaries, there wasn’t much deviation from the mean. The lowest reported base was $140k while the highest was $186k. While it’s impossible to say definitively that the respondents are mostly junior, that’s likely the case. Those who were surveyed had the option to self-identify as a vice president, director or managing director, but chose the title of quant/engineer. A New York recruiter who does retained searches for quants said the figures fit with what she sees at the junior and mid-level.
While $260k is a nice chunk of change for someone who may be in their late 20s, at least one expert thinks that quants are underpaid, particularly considering the investment they made in getting their PhD. Former sell-side and buy-side quant Robert Carver noted in a recent op-ed on our site that his brethren never see seven or eight-figure pay packets that senior traders and portfolio managers often earn. He argues that old-fashioned thinking tends to mislabel quants as engineers that are dispensable and easy to replace, thus they often aren’t justly rewarded.
The other reason quants are underpaid? They don’t make enough waves. “Most firms will pay you the least amount possible unless you complain, which is why the more vocal and aggressive sales people and traders have usually earned more,” Carver wrote.
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