AMA highlight: joining a hedge fund as a physics or math PhD
Why they want you, tips on how to prepare, and some resources
Earlier this month, we hosted a Careers in Industry AMA. Here are some highlights.
While some fields like data science and quantum computing might be cooling on hiring physicists, hedge funds are still interested:
Buy-side jobs1 most of the time prefer math/phys PhDs for their transferable skills because doing the job involves a lot of proprietary information that nobody has anyways, so you might as well hire people who you know will pick it up the fastest. Hedge funds might hire some econ majors, but algo-trading firms (especially HFT2) hire almost exclusively math/phys/cs people for their quant research roles.
If you’re a PhD in physics or math, how should you prepare yourself to get a hedge fund research job?
Depends on the actual firm and what type of strategies they run (automated vs discretionary). For high-frequency algo trading, you cannot do much to get ready for actually doing the job itself, but the most important things when you are getting ready for a job like that are:
Get ready for the interviews, which are typically pretty intense. This means brushing up on some first-year undergrad stats, learning basics of machine learning (basics of supervised learning in general, not just deep learning), and learning to solve brain teasers. For the first two, find university courses online (there are many where they have video lectures and even assignments with solutions). For brain teasers, there are many good resources online (r/quant is a good start).
Learn some basic coding skills (Python typically).
Try to do a small project to show interest and improve your CV (this is optional).
Good news is that, surprisingly, you've already done the hardest part. Having a Ph.D. is pretty well-regarded in the field and carries value (to the point that I'd—almost—recommend getting a Ph.D. for this reason alone, given you enjoy doing research).
Some good resources to get you started:
A practical guide to quantitative finance interviews. The most classic brain teaser book. Understanding all the problems and solutions in it should even be enough.
QuantitativePrimer. Also a very good resource.
Quantitative Interview Preparation guide from the Centre for Career Development @ Princeton
Quant Research interview guide on Reddit
Quant Trader Intern Interview Guide for Beginners — Pt.5 Onsite
Final thoughts:
Oh, I also remembered, I never stopped being amazed at how many questions about linear regression can be asked at an interview. Definitely learn to derive things about OLS and learn in-depth about ridge and lasso!
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Note: some quotes were lightly edited for clarity.
A buy-side job involves managing investments on behalf of clients or the firm itself, typically within hedge funds, private equity, or asset management firms, as opposed to advising clients on transactions like in sell-side roles.
High frequency trading