by Brian DeChesare

Sales & Trading Exit Opportunities: Got Global Macro Hedge Funds?

Sales Trading Exit OpportunitiesIf you do sales & trading, are you stuck in it forever?

That is the subject of our podcast today, which continues the tradition of… a new podcast here once every 5-6 months.

Just like with the equities vs. fixed income question, there’s a lot of misinformation about exit opportunities from sales & trading roles.

So our resident S&T expert joined me recently to discuss all aspects of the sell-side-to-buy-side transition, including:

  • How to think about the opportunities, and why you’re not just limited to hedge funds and asset management.
  • The process and timing – when it makes the most sense to move over.
  • The best and worst desks for exit opportunities, and what happens if you’re in sales rather than trading.
  • What to expect in interviews, and the most revealing question you’ll have to answer.

Get the full MP3 recording, the transcript, and the highlights after the jump:

Exit Opportunities from Sales & Trading

We have the same guest as in the previous S&T podcasts: he worked at a large bank for a few years, and then moved into a buy-side role at a hedge fund.

His role is a bit unusual in that it’s a hybrid of the traditional “investment analyst” and “execution trading” jobs at funds.

He has also authored several articles on M&I, including the one on a day in the life of an options trader, and an overview of the equities trading floor.

For this podcast specifically, his perspective was great because he has been through the entire process and now interviews traders for roles at his hedge fund.

Click here to download the MP3 of the M&I Podcast – Episode 004.

Click here to download the Transcript for the M&I Podcast – Episode 004.

I’m still at war with Apple / iTunes, so there’s no link to the feed there.

But I highly recommend SoundCloud if you want to subscribe and get future episodes as they’re released:

Key Points

We covered a lot of ground in this discussion, but some of my favorite points include:

Point #1: The Available Exit Opportunities from Sales & Trading

You see a lot of discussions where people claim that once you’re in trading, you’re in trading for life.

There is some truth to this because you do not develop as broad a skill set as you do in investment banking or private equity.

However, there is one commonly overlooked exit opportunity that many traders pursue: entrepreneurship.

He also weighs in on the three main types of hedge funds, and explains why PM-track roles are the easiest to win at global macro funds if you have an S&T background.

If you want to understand the different roles at hedge funds and how most firms are structured, check out this overview article.

Point #2: Moving into Non-Hedge Fund/Asset Management Areas from S&T… and from Sales

Technically, you could still get into areas like private equity and corporate development coming from sales & trading, but it is far more difficult.

To make the move, you’ll likely need:

  • Experience with the right product (e.g., a distressed credit trader moving to a distressed PE fund).
  • Evidence of the skill sets required in those roles, via outside training, classes, or other experience.
  • A willingness to come in at a lower-level position.

It is also possible to exit to buy-side roles if you’re in sales rather than trading, but it tends to be more difficult.

To make the move, you’ll need:

  • The CFA or something else that proves you understand fundamental analysis and that you have the “analyst mindset.”
  • Some evidence of risk management experience.

Point #3: The Best and Worst Desks for Exit Opportunities

You should avoid cash equities and also any specialized products that do not require fundamental analysis.

Derivatives desks are good, as are rates desks and anything that’s more macro-oriented.

We covered the macro vs. micro distinction in the previous podcast on equities vs. fixed income, but “macro” refers to analyzing factors like government policy, interest rates, and exchange rates, and “micro” refers to analyzing specific companies.

You could still work at a fundamentals-based fund if you’re coming from a “micro” desk, but you’d also be competing against many IB analysts.

Point #4: The Timing and Process

There is no structured process for joining the buy-side from sales & trading at a bank.

You’ll likely need around 2-3 years of experience and 6-12 months of managing your book, and you’ll have to try every networking avenue you can think of.

Our guest spent 7-8 months applying for and winning his role, during which time he went through 4 rounds of interviews (with 2-month gaps in between) and met with everyone at the firm.

That’s on the longer end of the expected time frame, but a typical process might last for 3-4 months.

The timing is also quite important because you want to move over as soon as you can (2-4 years), or when you’re much more senior (10+ years).

Point #5: The Ease or Difficulty of Moving into Other Areas on the Buy-Side

Just like people incorrectly believe that “there are no exit opportunities as an associate in IB,” some also believe that it’s impossible to move between different buy-side trading roles.

But it can be easier because you’ll have a wider network, you’ll know more headhunters, and you’ll have a vote of approval from at least one firm.

However, you don’t want to end up with lots of two-year and three-year stints over a 10-year period since that screams “job hopper” to many firms.

Table of Contents, the Transcript, and More

  • 2:08: Overview of the Interviewee’s Background and Buy-Side Transition
  • 5:00: The Three Main Exit Opportunities from Sales & Trading Roles
  • 14:05: What About Exit Opportunities from Sales? And What About Other Areas Like Private Equity?
  • 20:38: The Best Desks and the Worst Desks for Exit Opportunities
  • 25:06: The Timing and Process for Moving to the Buy Side
  • 34:07: What to Expect in Interviews, and the Most Common Interview Question
  • 38:49: Can You Move to Other Areas on the Buy Side?
  • 43:59: Natural Transition Points for Moving to the Buy Side
  • 46:39: Conclusion

Click here to download the MP3 of the M&I Podcast – Episode 004.

Click here to download the Transcript for the M&I Podcast – Episode 004.


Up Next Time

We still have a lot of sales & trading-related topics to cover, and next time we’ll probably shift back to the job itself, different desks, and how to advance up the ladder.

I also hope to cover more on tech/other non-finance roles (similar to the Google Financial Analyst podcast), if we can find the right guests.

Stay tuned.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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