UK
Hedge funds don’t rate MBAs
6 December 2007
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 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
undercover 31 Jan 2008
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