Why an Ivy League MBA Won't Get You a Job in Alts

The London Business School has recorded the highest percentage of alumni working in hedge funds, asset management, and private equity, according to eFinancialCareers.

Jobs at private equity firms and hedge funds are difficult to come by, even if you have an MBA from a renowned institution, according to a financial services career website.

The average percentage of the top 35 business school graduates working in hedge funds lingered at 3.8%, eFinancialCareers found. Instead, most opportunities for MBAs could be found in investment banking, with an average of 57.1% of MBAs in front office positions.

According to the website, US business schools were most successful in securing jobs at the top banks, a “not surprising” phenomenon as “banks in Europe, the Middle East, Africa, and Asia have focused more on recruiting at a graduate level and training in-house, [while] banks in the US have maintained their traditional focus on hiring from Ivy League business schools.”

However, US dominance fell behind when looking at percentages of alumni working in private equity, hedge funds, and asset management, eFinancialCareers’ database found.

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The London Business School topped the rankings with 6% of graduates in hedge funds, 14% in asset management, and 23% in private equity. The Columbia Business School took second place with 9% in hedge funds, 17% in asset management, and 16% in private equity.

New York University’s Stern, Oxford’s Saïd, Cornell, Harvard Business School, University of Pennsylvania’s Wharton, Yale, INSEAD, and Milan-based SDA Bocconi made the top ten on the list.

Last week at a panel at Stern, Michael Corbat, chief executive of Citigroup, reinforced the difficulty of breaking into hedge funds and private equity, due to “a limited number of seats in these firms.”

Instead, he argued now is an exciting time to join banking, emphasizing that it “is a business that’s still got the opportunity to grow.”

As investors around the world consider pulling their assets from former PIMCO CIO Bill Gross’ Total Return flagship, the fund has started to outperform a custom benchmark created by Morningstar analysts.

The index “aims to achieve as close a correlation as possible to the fund using long-only investments in passive indexes.”

Gross’ departure from the firm he founded in 1971 was announced on September 26. In the following week of September 29 to October 3—despite its massive outflows—Total Return outperformed this benchmark by 19 basis points.

“To put this in context,” Morningstar said, “we compared the performance of the fund with the custom index during the third quarter up to the day of Gross’ departure. During that period, the fund trailed the benchmark by an estimated 53 basis points.”

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In each of the four weeks leading up to Gross’ departure, the fund trailed its custom index.

Additionally, over the past week the fund has pulled closer to PIMCO’s own benchmark—the Barclays US Aggregate Bond Total Return index—but hasn’t yet outperformed it on a short- to medium-term basis.

Prior to Gross’ resignation, the fund had been averaging daily outflows of about $140 million, Morningstar said. In September, some $23.5 billion was pulled from the company—the greatest percentage of which exited on September 26.

“Last week’s shift from negative to positive performance relative to the custom index could have something to do with how PIMCO handled shareholder redemptions,” Morningstar said, “but the results indicate that last week’s outflows do not appear to have harmed performance in any meaningful way.”

The analysts said outflows from the exchange-traded fund created by PIMCO to mirror its flagship had moderated since the announcement of Gross’ departure, and they expected flows from Total Return had done the same.

In September, CIO examined how large funds’ performance often suffered because of their size.