The Ultimate Guide to Hedge Fund Careers

What do you know exactly about hedge fund careers?

Independent of the volume of knowledge you have on the matter, one thing is sure: you know you want to become a hedge fund manager. You’ve heard about the enormous paychecks, the working environment which is a real haven for mathematical geniuses, and the luxurious lifestyle. Still, what do you have to do and what do you have to know about hedge fund careers? Allow me to help you.

Hedge Fund Careers

When thinking about going down the road of hedge fund careers, there are some aspects you need to consider, apart from the usual education choices or good grades. You can call them ‘alternative standpoints’ if you will, and this is exactly what I’m going to try and help you with in this piece. When going about the matter of hedge fund careers, you’ll soon find out that the points of view I’ve listed for you below as well as the things you need to do and the measures you must take are far more important in your decision-making process than anything else.

Here they are.

#1. Are You Entirely Sure You Want to Work for a Hedge Fund?

As you, probably, already know or have been told by others, hedge fund careers are not easy. In fact, they are the most difficult ones available. This is the reason why most specialists advise you to go into hedge fund investing only if you actually want to. It should be your life’s dream and the sole reason you studied all those long hours and did all those extra hedge fund internships.

If it’s the other way around and your attitude is a bit more relaxed, don’t go into hedge fund careers. This industry has no time, space or patience for individuals who are not 100 percent committed to what they want to achieve.

Evidently, you can change your mind later on if you should so desire. However, you still need to give it approximately five years before you can call it quits. That’s how serious and important this job is. It takes a period of five years just to determine if you’re fit for it or if you want to do this for the rest of your life.

Working for a hedge fund needs to show in your discipline, knowledge of the industry, the passion with which you work every day, and, evidently, in your actions. If you don’t feel you were cut out for this, maybe another career is better for you.

#2. Start Studying the Hedge Fund Industry Now

As noted above, hedge fund careers are among the most difficult available on the job market today. Keep this in mind and try to understand that there is no ‘too soon’ when it comes to studying for this type of career.

The best way to start educating yourself on all the things related to hedge funds is to create daily habits that will inch you closer to your goal as time goes by. Here is what you can do.

  • Subscribe to a hedge fund newsletter and read it from A to Z. Try to understand its contents. If you are unable to, do some thorough research online. Do not give up when you come across a new or different topic. The more you know, the better.
  • Buy, rent or borrow books on hedge funds and read two chapters every single day. Do not skip reading on weekends or if you don’t feel like it. Take notes and write down all the valuable information you found in those books so that you can later put it to good use.
  • Revise your reading at the end of every week. Go through your notes once again and determine how much you memorized.
  • Join a local hedge fund club or association.

Handbook of Hedge Funds cover

These few points that I have highlighted for you ultimately need to lead you to answers to the following questions:

  1. Who are the industry’s major players? What do you know about them? What else can you find out about them that will put you one step above the competition?
  2. What are the most important terms and definitions when it comes to hedge funds that you need to know? Do you know them?
  3. What are the most common ones? Which ones do you feel you could apply? Which ones do the champions in the industry use?

#3. The Three-Circles Strategy

This strategy comes to us from a best-seller book written in 1995 by Jim Collins. Collins did some research and came to the staggering conclusion that all the companies which made it from small or average to large, employed this particular strategy.

When faced with a difficult decision, their leaders used to draw three circles. One was for the options about which they were very passionate, the second was for the options for which they could rely on their experience and take advantage of them in this way, and the third circle contained ideas which were known to be highly profitable.

When these three circles intersected, they would render just a handful of options that fit the three of them, just like in a Venn diagram. In other words, they would try to find the sweet spot at the intersection of the three circles.

Why is this important to you? Because you need to draw a Venn diagram, Jim Collins style, of your own.It’s one of the easiest and safest ways possible to make sure you will take all the right decisions when you consider hedge fund careers. The results will show you what positions to consider. They will be the ones for which you are most qualified, which you are passionate about, and which will turn out the most money. How well does that sound?

three circles strategy concept art

#4. Get a Mentor

You might think that the idea of getting a mentor is somewhat old-fashioned, but you would be wrong, especially when it comes to hedge fund careers. It’s quite a known fact that it’s a bit tricky to make it on your own in this business. Evidently, you need to work hard and study as much as you can, but without a person who can show you what’s behind the lavish curtains, you won’t get very far. The same goes for networking, which I will be detailing in a paragraph below. But for now, about mentors.

The same principle applies here as well. If it’s never too early to start educating yourself, it’s never too early to find a person who can guide you through the winding roads of hedge fund careers.

Find a mentor while you are in college.

It can be one of your professor, an older student who has already begun networking and has connections or a hedge fund manager who came to your Ivy League college to recruit. Don’t worry about not being able to find one. Most people are happy to help others and impart their knowledge, provided they have time for it.

Apart from that, if your mentor is working for a big company, he or she will be glad to take some apprentice under their wing and raise them in the spirit of their firm.

Display the following qualities to impress a mentor.

  • Discipline
  • Humility
  • A real hunger to learn and succeed
  • Commitment
  • Having a pro-active attitude about your education and work
  • Patience
  • Determination

#5. Internships Are Crucial

If you have managed to go through the first steps I’ve outlined for you above, meaning that you’ve solidified your knowledge on hedge fund careers and have chosen a mentor, you can move on to internships.

It doesn’t matter if you are currently working in another position, even if it is full-time. You should still go ahead and attend an internship and spend five or ten hours researching the ins and outs on hedge funds. It should prove enough to open up a whole new world for you, one which will teach you how hedge funds operate as a business and what are their trading strategies.

Do not miss out on internships.

If you want yet another reason why the piece of advice above rings true for every person who is interested in hedge fund careers, then maybe you would like to know the following.

Most employers regard internships as one of the main criteria for selecting possible employees.

The reason is that, even though they offer or open up an entry-level position, they would still like their candidates to have some knowledge as far as hedge funds are considered. That type of skill and experience, at that level, can only be obtained via internships, paid or otherwise.

Of course, it’s not a mandatory criterion. However, if you are applying for a job and have to go against several other candidates who have attended internships, unfortunately, you are among the last considered to be chosen.

Hedge Fund internships

#6. What Will Your Unique Value Proposition Be?

The next step after going to an Ivy League college, educating yourself on your own, finding a mentor, and participating in one or more internships, is to try and determine what position you want to occupy as far as hedge fund careers are concerned. This idea can be translated into one, a very simple question you absolutely must ask yourself.

Where do you fit in the hedge fund industry?

Not thinking about or not knowing the answer to this question is like stepping outside your door and not having a destination in mind. Indeed, the road does go ever on and on, but you need to know your destination.

Is there a particular type of job that you have in mind or that you would very much like to perform within the hedge fund industry? Are you looking for a distinct pattern of responsibilities? Do you have some unique skills that can help you decide the direction in which you want to go? Think about all these questions and find the appropriate answer. Only then will you be able to find your way.

This concept is a lot like the three-circles strategy I was referring to in a previous point. The difference is that for this idea to work, you need to take definitive action towards defining your role in the industry.

Here’s an example:

Let’s say you want to be an emerging market analyst. The tangible or pragmatic course of action here would be to write some white papers concerning the analysis of the emerging market type of investment itself. Apart from that, you could also get specialized in a definite area. For this, you must dig as deep as you can. Read all the books and materials you can find or interview at ten emerging market funds.

Never be generic.

Remember that generic people are the ones who are most easily forgotten. And when the competition for hedge fund careers is approximately ten people for one position, you do not want to be forgotten.

Define a niche for yourself and become the most knowledgeable person around in that particular niche. Compared to your average investment or trading professional, you must be the expert, the master, the virtuoso, and the whiz kid in your niche.

Tip – Don’t let all this knowledge you have, go to your head. If you’re too bossy or arrogant on account of the information you gathered, you might find it difficult to get promoted or even hired in the first place.

#7. Aggressive Networking

Yes, I mean aggressive.

The word was not chosen randomly. As noted above, there are more candidates for your position than you could imagine. One of the best tricks you can pull to make sure you get in the industry is to know someone who can then further your cause. What can you do about it?

Use your mentor.

This situation is a perfect one to use the mentor you’ve selected for yourself as means of networking. He or she can talk you up to banks or companies, which is a lot better than you just going in with your resume and hoping for the best. Make sure you push as hard as possible and don’t give up. Most likely, you will not get hired right off the bat at the first company where you apply. You will have to put in your resume at several of them, the more, the better, in fact, and take it from there.

Tip – Do not take any refusal personally.

Always remember that, if they refuse you, it’s not because of you personally but because they found you lacked certain skills or bits of knowledge related to hedge fund careers. In fact, you should take this in the most positive way possible.

Ask your interviewers to tell you exactly what it was you were lacking and start working specifically on that. However, don’t forget to work on your personality as well. Be polite, firm, and professional, yet funny, friendly, and charming. It will take you a long way not only during your interview but with your clients as well.

the importance of professional networking

#8. Skills Required in Hedge Fund Careers

Evidently, each and every hedge fund is different from the next. However, they are all looking for typically the same qualities and set of skills. Here are some examples.

  • Abilities and experience which can be quantified. This means that it will never be enough to say or show that you have a certain amount of experience or that you have this and that skill or ability. You need to quantify them. While you worked for your last company or employer, how much money did you make for them? What amount of money did you bring into the firm via said skills and expertise?
  • Education. You may already know this, but it still needs to be stressed. Hedge fund careers require an Ivy League education, and MBA or even a quant-focused Ph.D. Once again, they are not mandatory. However, seeing as, probably, all the people you’re up against for a hedge fund position have at least one of the three things I mentioned, it’s unlikely you will be picked before them.
  • Evidence that you are loyal, passionate, and humble. As previously stated, you can and should be a genius in your field or your niche, but you cannot brag about it. Be the strong, silent type, which commands respect, trust and admiration via your knowledge. Never be the insufferable know-it-all, who thinks he or she is too good for any company or working environment.
  • Learn to do a little something extra on the side.Even if you become the guru I was speaking of earlier; there should still be one more trick up your sleeve. Acquire an extra skill that will set you apart from all the rest and that will make all the companies want to hire you. For example, take some PR courses, asset gathering or data analysis training.
  • Having been designated as a CHA, CFA or CAIA associate. These acronyms stand for Chartered Hedge Fund Associate, Chartered Financial Analyst, and Chartered Alternative Investment Analyst.
  • Being able to digest and work with a system based on high commissions and bonus compensations.

Bonus Round – Find an Unadvertised Hedge Fund Job

Could this be the recipe to success? Why not? Instead of applying for the job which everyone applies to, try finding the ones which have not been advertised at all. Go online, find the listings of companies from the Chamber of Commerce, associations or industry directories and simply cold call them. You might be surprised at how open they are to the idea of taking you in for an interview. In fact, they might even be impressed that you took all that time and made the effort to find and apply to them instead of going for a regularly advertised company with openings.

While you read this article, it becomes more and more evident that hedge fund careers are not about just dipping a toe in the water. They’re about diving in and giving it your best. Are you ready to do that?

The Ultimate Guide to Hedge Fund Careers 1
The Ultimate Guide to Hedge Fund Careers 2
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