How much money do employees of star private equity firms get?
This must be the top internal secret of each investment institution.
But a few days ago, a very individual private equity fund manager revealed some incentive details in the "hero post" (recruitment article) sent.
It must be said that the relevant details are still very exciting.
But whether or not you can get it also requires the employee's own "ability".
This fund manager is Li Bei, the founder of Banxia Investment and the "private equity witch". And the related content is also worth dissecting.
Li Bei widely scatters "hero posts"
On November 2, Banxia Investment published a copy of "The investment research team needs several partners". They officially announced the start of the recruitment of investment research personnel.
Interestingly, the job posting released by Banxia Investment did not specify the specific position in detail, but showed readers a large section of their company's image and characteristics through videos and texts.
This obviously shows that this recruitment is the first requirement for the candidate's values and concepts
How to be a good hedge fund manager?
In the job posting, Banxia Investment (that is, Li Bei) asked a question to potential candidates:
If you want to grow into a good macro hedge fund manager, how should you grow?
She also gave her own answer:
The essence of macro investment is to figure out two things. One is the flow of capital, the other is the flow of goods. Then combine them together.
Even if you want to understand one of them, whether it is the flow of goods or money, if it is only top-down economic data analysis, textbook theoretical reasoning, is completely insufficient.
You need to be able to deeply understand the operating mechanism at the micro and meso levels, know the incentives and constraints faced by market participants, know their behavioral laws, and understand the transmission mechanism of market variables. This is true of financial markets, or goods markets, or service markets.
Dig deep into reality and discover patterns
Li Bei also used two examples to describe the possible growth of joining their team.
If you delve into a large cyclical industry, you feel the drivers of the economic cycle on both the supply and demand sides. You will realize how money and credit have changed financial conditions, how they have changed the investment climate and the consumer environment, and thus the aggregate demand of the industry.
You'll also observe how the capacity utilization environment and demand heat change a company's profitability, triggering fluctuations in the company's investment cycle.
You'll also observe how the iteration of technology contributed to the reshuffle and blood change of the industry, the collapse of old faucets and the rise of new aristocrats. In this process, you can not only tease out a clear logical framework, but also discover the laws of the rhythm of time. ”
If you study banking, study financial markets. You can feel how the investment needs of residents, governments and businesses drive the demand for capital, how the economic environment affects the attitude of central banks, how regulatory cycles affect the mechanism of money creation, and thus how the supply of funds is changed.
Similarly, in this process, you can not only tease out a clear logical framework, but also discover the laws of the rhythm of time.
What kind of person do you want to recruit?
According to Li Bei's fast-talking personality, the whole copy will also involve the assessment and reward mechanism of Banxia Investment candidates.
The basic requirements of candidates include the following:
- Education: graduated from China's top 5 universities, or foreign universities of similar level;
- Age: under 30 years old, 1-4 years work experience;
- Fresh graduates: Fresh graduates who graduate next year can also come to internship first, participate in research training and complete small projects.
In general, Banxia Investment is very cautious about talent recruitment, and the talents introduced have long-term planning and planning, which can be seen from the details of their recruitment.
What about the incentive system?
Banxia Investment's assessment and reward mechanism for candidates is also very systematic, specifically including the following aspects:
1) Banxia Investment provides a base salary higher than the industry average.
2) Banxia Investment gives a very competitive incentive mechanism, and after completing independent research tracking and independent investment advice, you can build your own simulation portfolio.
3) After being hired, employees can participate in systematic training, involving multi-asset analysis frameworks and practical cases.
4) As long as the income of the simulated portfolio is in line with the return drawdown ratio greater than 1.5, the contribution of the simulated portfolio to the company can be divided into more than 20%. ”
If the above belongs to the 20% commission incentive, then according to industry feedback, this proportion belongs to the first-line level in the industry.
Key wording
Of course, no boss will easily give a high dividend ratio without attaching standards and requirements.
In Li Bei's job posting, there are some key points that cannot be ignored.
First, 20% of the distribution of the researcher must be derived from the contribution of income created by the advice given by the researcher;
Second, the premise of researchers receiving a high proportion of incentives is that the "return drawdown ratio" of the simulated portfolio exceeds 1.5 times.
The so-called "return drawdown ratio", that is, the annualized rate of return over a certain period of time / the maximum drawdown rate for that period.
This indicator is considered to be a measure of the strengths and weaknesses of a fund's investment strategy, which comprehensively reflects the risk assumption and return of the fund manager.
What do you think of the bonus scheme?
It can be seen that the return drawdown ratio has become a key indicator in the investment incentive mechanism of Banxia.
So, what is the drawdown ratio of the income of the products managed by Banxia Investment Li Bei?
As of October 28 this year, the annualized return since December 2017 was 27.41%, the maximum drawdown during the period was -12.95%, and the return drawdown ratio was 2.1.
In other words, Li Bei, as a macro hedge fund manager, can achieve the above "assessment indicators" in the long-term dimension.
And the requirements she gave for researchers are lower than her own historical performance, of course, the overall difficulty is not low.
What incentive models are in the industry
The team incentive plan of the head private equity has no public information, and after communicating with a number of tens of billions of managers, Zishitang found that the incentive of investment researchers has the following patterns:
【Direct incentive】The mode of issuing bonuses. Taking a long private placement as an example, after the researcher recommends the stock, if the fund manager adopts it, then refer to the excess performance of the recommended stock (such as outperforming the industry index) with reference to the net value contribution to the portfolio, and also refer to the effective communication frequency between the researcher and the fund manager.
Some institutions will also take measures to reinvest the bonus of fund managers into their products to achieve deep binding with the interests of holders.
[Indirect incentive] The manager will hand over part of its own funds to the researchers with better performance, let them try real management, adjust the management scale according to the actual management situation, and further reward them according to their performance.
Both of these schemes have a certain degree of rationality, but the degree of incentive may be more powerful than the half-summer incentive scheme.
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