If you're trying to get a job at hedge fund Millennium Management, prepare to fail. As might be expected, getting into the fund is challenging. The latest investor letter from Millennium founder Izzy Englander clarifies precisely how challenging it is.
"We hire roughly 1% of the portfolio manager leads we receive each year,” said Englander in his annual investor missive, which was sent last week. Potential portfolio manager recruits, referred to by Englander as "prospects" are screened on the basis of, "a number of factors that can include performance and expected alpha drivers, risk profile and return volatility, as well as infrastructure requirements and financial resources dependencies,” Englander added.
In other words, you'll need to have an excellent track record of producing strong returns with a Sharpe ratio of maybe 2.0 or more (bear in mind that the average Sharpe ratio across the fund last year was 4.44), and a strategy that isn't reliant on abnormally costly technology infrastructure.
Despite all these prerequisites, Millennium succeeded in doing a lot of hiring last year. Sanjay Harji, a former managing director in Goldman's EMEA equities execution team joined in November, for example. Julien Prado, JPMorgan's ex-head of U.S. Index exotics and hybrid trading went to Millennium in June.
Millennium Management is divided into independently operating teams known as pods, each comprising their own portfolio managers, analysts and support staff. Englander said the fund ended 2020 with "more than 265 portfolio manager teams, the most we have ever had in our history.” This time two years ago, there were only 200.
The process for getting a job as a portfolio manager at Millennium is opaque. Rightly or wrongly, the fund has a reputation for hiring curmudgeonly trading veterans. It doesn't advertise job openings; there's no formal application process. Instead, potential candidates will often approach the fund with their investment strategies and will be heavily vetted and interviewed before the fund decides to hire them - or not.
Portfolio managers choose their teams, although Millennium recruits technologists centrally and even runs a technology internship program.
Millennium's teams are mostly working from home right now, but in normal times staff are based in notoriously spartan offices in Geneva, Greenwich, London, New York, Hong Kong, San Francisco, Singapore and Tokyo. A growing proportion of staff are outside the Americas: Englander said “more than half" of the new portfolio managers who arrived last year were not in the U.S..
As Millennium diversifies, it seems that a growing proportion of Millennium's hires are also operating outside its historic focus on fundamental equities and rates strategies. Business Insider said many of last year's portfolio manager additions were in areas like macro, commodities, and capital structure instead. “Diversification was a fundamental factor in our 2020 performance," said Englander. "Over the course of the year, we saw positive returns across all four of our strategies and all three of our global regions.”
Success is likely to beget success as more portfolio managers try to get into Englander's stable. In 2019, the average portfolio manager at Millennium Capital Management in London earned $1.1m. Unlike some rivals, Millennium doesn't net gains and losses across teams: if one team makes a big profit, its members are paid commensurately - even if another team makes a big loss.
Photo by Jackman Chiu on Unsplash
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