Hedge fund MD reveals the quant team quietly behind hiring decisions
Its a volatile world right now, and the upcoming US election is set to make things even more so. A recent panel at the Quant Strats 2024 conference in London discussed this, and a senior MD at hedge fund Verition revealed how it all affects hiring.
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Marc Vesecky, senior MD of global quantitative strategies, said "diversification" is the key to survival in a volatile market. He says Verition's quantitative research division has "25 teams, each with different strategies," and the fund works "very closely with our PMs to understand" how best to scale. Vesecky says the process is "really about iterating; bringing in new datasets, bringing in sub-PMs," and seeing what works.
But a different kind of quant team helps decide which teams get those resources: Verition's "spectacular risk management team." Vesecky, who previously spent four years as a risk manager at Citadel, says Verition "collaborates really closely with those folks to run analytics on who's performing well." The fund then uses that data to aid its "discretionary view on whether we should scale or not." He notes that "having dry powder is really important", and that the fund doesn't want to be "running full tilt leverage all the time," so being selective with how it distributes resources is important.
The quant and risk teams are "fairly disjoint" at Verition according to Vesecky, "and they should be." He says that when they're too closely related, "you'll find you're not looking at risk independently enough."
This doesn't mean quant teams have no chance to improve their risk performance. Vesecky says Verition "works with each individual team and collectively to look at risk exposures and at hedging those tails."
Working in risk, therefore, seems like the place to be for humble quants that still want to have significant impact on how a fund is run. Balyasny's incoming head of quant research, Giuseppe Paleologo, says working in risk can be "extremely intellectually satisfying", and can be a much more sustainable career than quant research. The pay may not be quite as impressive but you can still earn plenty; one hedge fund is recruiting a risk modelling quant MD on a TC of up to $600k per year.
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