December 3, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Hedge funds still beat private equity for work-life balance

It’s not easy to get a junior job in an investment bank. Hundreds of thousands of people apply for internships and graduate jobs in banks each year. Having succeeded, you might think they’d stick around, but the best people often want to move out of banking and into something else a few years later.

Private equity is usually the preferred exit option. Most young bankers are attracted by the pay on offer in private equity. They’re also attracted by the presumption that the working hours in private equity will be less punishing. People don’t leave banking because of the pay; they leave because of the lifestyle.

That may be a mistake. While there are indications that private equity beats out IB on work hours, it’s not by much.

So, what is the promised land for a junior banker looking for a better life? Hedge Fundsapparently. As one first-year associate told us a few months ago: “I know people in PE who are still regularly working until 2am, and personally I want to move away from that. I want to start a family, and in the future, I don’t want to still be working after the markets close.”

This seems to be grounded in reality. Data collected by Wall Street Oasis, the online forum, suggests that someone working at a top 30 private equity firm can expect to work between 74 and 87 hours a week, more or less on par with the 78 to 90 hours a week that WSO says are common in investment banks.

By comparison, hedge funds, with one (presumably painful) exception, can expect to work between 61 and 77 hours. The exception is 1209 Capital Partners, which may or may not have ceased to exist in 2017.

Hedge fund pay isn’t too shabby, either – Wall Street Oasis suggests that an analyst earns $153k a year in banking (at a bulge bracket) and $122k a year in private equity, but $178k a year at a hedge fund.

Salaries at VP level are also preferable – a bulge bracket bank pays an average of $392k and private equity $363k, whilst a hedge fund VP can expect around $464k.

Better pay and more reasonable hours – on the face of it, at least.

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