Ronen Israel is an M&T alumnus in the Class of 1995. He is currently a Principal at AQR Capital Management, where he heads the Global Alternative Premia group that employs various investing styles across asset classes. In addition to being a published author and a frequent conference speaker, he sits on the Executive Board for the M&T program.
We recently caught up with him about his experience in the M&T program and his life post-graduation.
M&T: How did you find out about the M&T program?
RI: Believe it or not, I was 12 years old. My brother’s best friend was attending Penn and heard about the program. He knew me pretty well, and thought I would be a good fit. So he ended up sending me some materials for the program, even though I was just in middle school.
M&T: Did you already know much about Penn?
RI: I grew up in Pennsylvania, in one of the suburbs outside Philadelphia. However, despite my proximity to Penn, I didn’t have any real interaction with the school until later in my life.
M&T: In high school, did you focus on math and science, with an eye toward M&T?
RI: I liked math and science; but I liked languages and economics as well. I was pretty well-rounded academically. I loved history — my family still jokes about me becoming a history professor.
Then, the summer between my junior and senior years, I attended the Governor’s School for Business which was held at Wharton that year. While I was there, I sought more information about the M&T Program and I talked to some of the professors who were teaching the Governor’s School. They told me that the M&T Program would be great for me given my interests. And so that fall, I applied and was accepted Early Decision to M&T.
M&T: How did you choose your engineering major and Wharton concentration?
RI: I chose Bioengineering and Finance because I really enjoyed both areas. I found the problems that Bioengineering was trying to solve incredibly interesting.
M&T: Even the six hour lab course?
RI: Well, I have more of an appreciation now for the classes I took in college than I did when going through those classes. I think this is true of most things. It’s only with time that one realizes the value of what one was learning.
M&T: How have you stayed connected to Penn since graduating?
RI: A large part of my connection to Penn stems from the recruiting process. Even back in 1999 when I first started at AQR, I led the way for our on-campus recruiting. I do this less frequently now, but I used to go back to campus at least once a year to recruit M&T and other Penn students. On some occasions, I would just talk to M&T students about working in finance. Other times, I would represent AQR at the information sessions that we held on campus, do the on-campus interviews and the second-round interviews. We have hired many M&T students through the years, and as further evidence of our bond with the program, in addition to myself two other AQR Principals—including our Managing Principal, Cliff Asness—are also M&T alums.
A few years ago, I was asked by the program to join the M&T Executive Board. A lot of students in the program may not know this, but we actually do have an M&T Board. It is comprised of a small group of alumni who meet twice a year with Dr. Hamilton, M&T Director, and members of his team to help set a strategic vision for the program.
M&T: How has M&T helped prepare you for where you are today?
RI: What M&T does a really good job of is preparing students on how to solve problems that you will face in business. The most important thing I got out of my engineering degree was learning how to solve problems, how to methodically decompose a problem into solvable parts, come up with a procedure to solve those parts and then implement the plan. Those are skills you need in every aspect in life, especially in the business world. So coming from an engineering background gives M&T students a leg up on single-degree business students since we learn how to solve complicated problems.
The business curriculum was essential in providing a perspective on finance, marketing and management. Being able to understand these concepts made it easier to work in the finance industry. The terminology doesn’t seem foreign and you feel comfortable in that environment.
Also, M&T opened a lot of doors. Being an M&T grad gives you an instant stamp of credibility. People recognize that you have gone through a rigorous program. People know that you are capable, determined, willing to work hard and driven. People understand what it takes to get into and through the program, so you become a known quantity — even if you are unknown to the person.
M&T: What did you do after graduating from Penn?
RI: I first went into management consulting but got disenchanted. I felt like I was jumping from project to project, but I never got to see the fruits of my labor.
Then I happened to be referred to a job at a quantitative hedge fund run by a well-known Wharton finance professor. This was very fortunate because there weren’t many quantitative hedge funds at the time or a field known as “quantitative investing.” When I started, I immediately realized that this was a great way to combine finance and technology and was a perfect fit for me.
I’ve been in that area ever since. I worked at that firm for a few years and then came to AQR, first as an associate and steadily working my way up to a portfolio manager and Principal (i.e., Partner). I’ve been in the quantitative world for a long time, and I feel like it’s an ideal career path for M&T students who like finance and want to figure out a way to apply their quantitative skills to it.
M&T: Could you describe the quantitative industry?
RI: At AQR, we employ more than 120 people with Ph.D.’s and other advanced degrees, and we apply fundamental research to investing in a very disciplined and systematic way. For everything we do, we are concerned with understanding the economic intuition. We aren’t just quants that don’t understand the economics. We start with the economic intuition and use quantitative tools to study the data and implement strategies. It goes back to what I learned in the M&T Program: problem solving.
M&T: What is your current role at AQR?
RI: My role here at AQR is as portfolio manager and researcher. I am responsible for a number of funds and products that we have at the firm.
M&T: What time do you normally have to get up in the morning?
RI: 6 or 6:30 AM.
M&T: And what time do you usually leave work?
RI: 7 to 7:30 PM. I get home, see my kids, put them to bed and oftentimes do work from home afterwards. I typically go to bed at 11PM.
M&T: That’s a long work day.
RI: Actually, it’s much shorter than it used to be! Since having kids, I have spent more time with family. So I’ve become more efficient at work. Over time, I have learned to envision what the end product should look like before I even begin a project. So at each step of the way, I have a good sense of what has been accomplished and what still needs to be done.
M&T: What are some of the challenges of being a PM and which ones do you particularly enjoy?
RI: Obviously, there’s the challenge of generating returns. We build long-term strategies, but they have their good times and bad times. And as a portfolio manager, you have to live through the tough times. But it’s a very dynamic job, and you see the fruits of your labor every day in the P/L charts. The world is constantly evolving and there’s always something interesting that presents a new problem to be solved. That is pretty cool and enjoyable.
M&T: Is there anything you’re currently working on that’s interesting?
RI: Our DELTA strategy is very interesting. When developing it, we looked at classic hedge fund strategies and tried to capture some of those returns in a more disciplined and systematic manner to provide investors exposure to those strategies in a more efficient way. The DELTA strategy is innovative both in its approach and execution.
M&T: Do you have any advice for current M&T students?
RI: Learn to solve problems. Learn about how the business and technology worlds work. Those are very valuable skills.
Once you graduate, it is very important to establish yourself as a go-to person. You need to prove that you are detail-oriented, conscientious and hardworking. Someone who is relying on you should be able to trust that they are getting high-quality output in the most efficient way possible. When they are able to place that sort of trust in you, then you become a go-to person.
Eventually, you will be given more and more responsibility. And the more things you get to do, the more experience you have, the more opportunities you get to take on things. Everything grows from there.
I view the development of your career in a few stages. You start off being told what to do and how to do it. Later, you are told what to do, but not necessarily how to do it. And then you are given a general concept and you have to figure out what to do and how to do it. And finally you become the person who comes up with the concepts. It’s not really about your title. It’s about where you are in that process. In order to advance, you need to gain your superiors’ trust. All along the way, you’re proving that you’re a go-to person.
The author Raymond X. is a current Penn and M&T senior in the Class of 2014. He studies Materials Science within Penn Engineering and Finance and Statistics in the Wharton School. While an intern at AQR, he worked in the Global Alternative Premia team.