How to Become a Hedge Fund Manager


Hedge fund managers command one of the highest rates of pay in the entire financial sector. But… it’s risky profession. Failure to outperform other investment markets can lead to unemployment in a very short space of time. Consistent performance is a must!

As a hedge fund manager, you will be responsible for your clients’ – possibly even your own – assets and investments. You will analyze the market and use aggressive, sometimes risky, trading strategies that yield high returns. When you’re in the business you must remain on your toes at all times and shift large quantities of money from one market to another in order to maintain adequate growth and stay ahead of the game.

The average hedge fund firm will receive approximately 100 inquiries per week from students seeking work experience and professionals looking for employment. It’s a highly competitive field that requires years of education, hard work and determination; therefore, the earlier you start, the better.

 

Undertake a Related Master’s Degree

A strong background in mathematics and economics is essential. You will be working with extremely complex investment strategies and will need to assess the market and make educated predictions. No investment is ever fool-proof; therefore, every financial decision you make must have the statistics to back it up and demonstrate that it’s profitable.

You should start career planning in high school by striving for high grades in related subjects. Acceptance to a relevant course at a good college or university is the first step towards success. Undertaking a bachelor’s degree in business with an economic or accounting focus is highly recommended, especially if it has a relevant major, such as mathematics, finance or computer science.

After completing a bachelor’s degree, you must acquire a master’s degree – preferably from a top business school – and retain top grades. This is critical if your aim is to join a successful, well-known firm. Most working hedge fund managers have a master’s degree in business administration; however, there are various MBA avenues that can lead to a career in the industry.

A general MBA covers a wide variety of subjects in the business sector. Most courses will include modules in marketing, business law, general management and economic analysis. An MBA in business marketing is more relevant. Hedge fund managers are always trying to raise assets from financial advisers, pensions and corporations, and business marketing programs are often geared towards raising capital. An MBA in business management can also be highly tailored as specific modules in hedge fund management can be undertaken.

After completing a master’s degree, you should take a Chartered Financial Analyst (CFA) test. This is not an academic certification, but is considered by the financial world to be the most difficult test on Wall Street. Fewer than 20 percent of test-takers are successful; therefore, having this credential to your name will demonstrate that you’re not only serious, but have the skills to succeed in the field. The CFA test comprises of three exams and work experience. You also have to acquire a number of professional references. This credential is awarded by the CFA Institute, which is an internationally recognized organization.

 

Find Your Unique Value Proposition

A unique value proposition is essentially your individual selling point. Rather than being a generalist, consider specializing in a niche part of the industry. For example, if your primary interest lies within emerging markets, write a white paper that showcases your knowledge. Finding your unique value proposition comes down to passion, so ask yourself “What aspect of the hedge fund industry do I enjoy the most?” Developing an exceptional standard of knowledge for one particular topic will give you something others don’t have.

Making savvy investments is at the core of every job, but having extra skills certainly won’t hurt. A background in risk management, administration or public speaking could provide an extra unique value proposition that will strengthen your resume. Sometimes it’s worth completing short courses to gain an extra insight on the business and improve your skills, especially if you’re struggling to find employment or internships.

 

Start Networking As Early As Possible

The hedge fund industry is filled with job seekers with flawless grades and impressive resumes; therefore, standing out among the crowd takes more than an education. Networking is crucial. If you don’t have the stomach to attend corporate meet ups, introduce yourself to authoritative figures, and literally push your way into the business, you will not succeed. Recruiters will rarely work with anybody who has less than three years of experience in the hedge fund industry. This often leaves applicants faced with a difficult catch twenty two. For this reason, taking a more personal approach is always recommended.

Internships will help you get to know the players in the industry. Even if you’re working full time, taking on an extra five hours per week to shadow an industry veteran could be enough to give you a solid understanding of how the business works. While on-site experience is always better, don’t pass up opportunities for remote internships. Complete as many internships and work experience placements as possible and, when you’re qualified to enter the business, get in touch with the program leaders to see if any jobs are available.

Cold calling is rarely successful, but it can be a great way to get on a firm’s radar and could lead to an interview in the future. Firm’s often pursue their existing pool of candidates before advertising if an opening becomes available. If you’ve cold called them in the past, you may stand a better chance. Company contact details are available via the online Chamber of Commerce listings.

Always keep on the good side of your fellow classmates. Every year a new wave of junior traders start new work placements. Sometimes your best contacts are the very people you sat next to in the lecture theater, or compared notes with in a seminar. One day they could be managers themselves looking for trustable people that have climbed the slippery slope with them.

When interviewing, prepare for the most unconventional, off-the-wall meeting you can imagine. Hedge fund managers will test the agility of your mind by bombarding you with questions that are seemingly unrelated to the industry, only to follow up with something more conventional and analytic. The idea is to see how well you can cope under pressure, juggling different topics on a whim.

 

Work up the Chain of Command

You will have to start out as a junior trader and deliver a consistent high level of performance to work up the career ladder. Becoming a manager takes many years of savvy investing and determination. When you finally become a hedge fund manager, you’ll more than likely have a six-figure income and be responsible for millions of dollars in assets.

The hedge fund industry is on the rise and expected to grow by approximately 15 percent by 2020. While competition is fierce, job opportunities are plentiful for those with the right attitude, drive, grades and experience. The whole hedge fund industry is built on calculated risk. While managers won’t hire a reckless renegade, they’ll also think twice before hiring someone too conventional. While grades and certifications will get you through the door, it’s creativity and a hunger to succeed that will get you noticed. You must show that you’re passionate about finance, willing to take chances, and have an innate desire to grow their company.

 

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