If you are looking for a career in the financial markets, I am sure you might have thought about the hedge fund manager post. The hedge fund managers are known for their suave business sense and extremely successful business prospects. Given the high salary structure and extremely attractive bonus packages, becoming a hedge fund manager is one of the most sought after opportunities.
So then the question is how to become a hedge fund manager?
And what are the hedge fund managers key responsibilities?
Well, you have to understand that compared to a conventional investment professional, hedge fund managers have a rather challenging job profile.
The Hedge Fund Manager’s Job
Before you consider becoming a hedge fund manager, it is imperative to understand the job profile. You need to understand the key responsibilities that they have to take up and the challenges that they have to face. This will give you a realistic view about your competence vis a vis this career. Well, first and foremost, we have to understand that the term hedge fund denotes a financial instrument that maximizes the returns and minimizes the risk. Well, this is a direct outcome of the overall strategy that is applied. Therefore, a hedge fund manager is someone who specializes in charting out these strategies. They create financial solutions that maintain the return scope without exposing your investments to additional risk.
Hedge Fund Managers Create a Variety of Funds
They invest across asset classes like stocks, Futures, Bonds and even unregistered securities. The whole idea is reducing the risk without meaningfully impacting the return outlook. Moreover, the idea is to maintain the returns even in falling market scenario. Typically hedge fund managers work in different kinds of working environment. They could either be part of large hedge funds or work for small boutique funds or mere individuals with significant investment.
Remember becoming a hedge fund manager is all about learning how to keep the profit channels abuzz irrespective of the market conditions. The market could be reaching new highs or nose diving to multi-year lows, as a head fund manager, you have to know how to generate fresh returns at all times.
So the Question Then Is What Are the Key Duties of a Hedge Fund Manager?
Well, you would say, it is all about managing the fund efficiently and maintaining the gains in every possible scenario. Well, they achieve it using a combination of elements:
- In-depth research and analysis of the market trends
- Analyzing the market movements in a detailed fashion
- Identifying the most appropriate assets to invest in
- Creating an investment portfolio
- Investing in assets to create long-term value
- Expanding returns by increasing leverage
- Being able to anticipate market movement and take precautionary measures
- Organizing client meets and advising them on investment methodologies
- Helping clients in taking up the best possible investment route to maximize their returns
- Convincing potential clients about taking up a certain investment route
How to Become a Hedge Fund Manager?
So the next point would be the steps involved in becoming a hedge fund manager. It involves multiple steps, combination of qualifications and experience too. But before anything, if you are keen on becoming a hedge fund manager, you have to develop an understanding of the markets. Remember the absolute return is all about creating a sustainable long-term profit opportunity.
That is not possible without an in-depth understanding of the market. While there sure are many kinds of academic qualifications that can prepare you for the job, the fact remains that the hedge fund manager’s job also involves a lot of intuition. But you can always argue that more than being born with this intuition, an efficient hedge fund manager acquires them on the job.
Yes, indeed hands-on experience in anticipating the nitty-gritty of the market is a key catalyst in helping you develop your deep sense of intuition. Diligence along with passion and intuition are very important characteristic traits for anyone interested in developing a deep sense of market maturity. Yes, indeed that is a keyword. A relative maturity in market dealings is what helps you identify trends and create profitable combinations. Remember a hedge fund is inevitably about combinations that can generate returns in falling market as well as when stocks are rising.
One of the simplest ways to achieve it is via effective diversification. In this context, you have to understand that effective diversification happens when you are aware and expert about the various asset classes that you could possibly invest in. After all, you have to remember that every asset class works in a unique way. If you are not thorough with that, you can easily book losses and defeat the entire purpose of dealing with the hedge fund.
1. Academic Qualification for Hedge Fund Manager
Therefore, the point to ponder on is what are the educational qualifications required for becoming a hedge fund manager?
Well, first and foremost you have to understand that given the huge salary outlook, competition is rather fierce. Therefore, right from the word go, excellence in your performance is a key factor. You need to choose the most appropriate bachelor’s degree and make sure that you maintain a consistently good performance. In many ways, choosing the right bachelor’s degree helps you chart out the most profitable career path in this field. Studies indicate that most entry level hedge fund job openings need you to also get a master in any of the business disciplines.
You can choose business majors like:
Even a Business Administration degree stands you in good stead to channelise your growth and develop the necessary business acumen. Apart from a comprehensive degree, it is often imperative to choose an appropriate institution to pursue your degree from. Remember that this can play a crucial role in helping you develop a sharp sense of business understanding. It will also help you fit into the role of a hedge fund manager in a variety of firms, be it big or small.
Apart from the basic role of hedge fund manager, you can take up specialized responsibilities like:
- Asset manager
- Hedge fund analyst
- Hedge fund trader
Alternatively, you could also look at an accounting degree if you are keen on becoming a hedge fund manager. This will help you develop a deep understanding of the variety of accounting and tax related principles in the investment world. Let’s say if you have a fascination towards positions like hedge fund accountant, you could easily go for this kind of degree. However, there are a few other subjects that can help you develop expertise in being an effective hedge fund manager.
This generally includes degrees in:
It also helps develop your macro understanding of the various facets of hedge fund investment. Additionally, it provides you with the ability to handle a variety of other related positions in a hedge fund like risk analysis, economic analysis and even gauging the political ramifications on hedge fund investment. You must understand that these are all necessary elements of being a hedge fund manager. This is because they help you develop a keen sense of focus and ability to understand the strategic importance of a variety of functions in hedge fund investment.
2. Quantitative Analysis & Hedge Fund Investment
Quantitative analysis is also a much in demand sub-section of hedge fund manager’s job profile. The demand for quant analysts are increasing. Therefore, more and more hedge enthusiasts are also looking at avenues to create an expertise in a variety of these algorithmic trades and quantitative understanding of the market. An in-depth degree in mathematics and statics is an absolute necessity to gain expertise as a quantitative analyst. You could even opt for a Bachelor of Science degree in physics, computer science, mathematics or even engineering can serve the overall purpose.
Some academic institutions, however, offer specialized degrees in financial engineering and quantitative analysis. This helps you develop a specialized focus right from undergraduate levels. It is needless to mention that this kind of academic qualification will, no doubt create a distinct level of specialized focus and go a long way in making sure you have the edge over your peers. You must understand that the hedge fund market is extremely competitive and more the number of specialized degrees you have, the better is the scope for your future growth.
Moreover, a Specialization Also Enhances Your Area Expertise.
This decidedly makes you better geared to take the advantage of the available opportunities. The strategies that you can decide on the basis of this specialization also further seal your position as an efficient hedge fund manager. Additionally, quantitative analysis is one of the most popular and upcoming trends in the investment world. Therefore, by taking up this specialization, you can tackle the challenges of the financial world a lot more efficiently. Education at the top institutions also means that you get connected with some of the top names in the industry.
Most of your classmates go on to become noteworthy investors and fund managers. Therefore, you can easily create a circle of notable connections and friends who can help take forward your investment initiatives a lot more efficiently.
3. Do You Have the Aptitude to Be an Efficient Hedge Fund Manager?
However, education qualification is just one part of the story. One important step in how to become a hedge fund manager is the simple fact that you should have the aptitude for it. After all, becoming a hedge fund manager is as much about academic proficiency as it about personal interest. This is because the hedge fund managers’ job is a relatively high-stress position. Though the handsome salary compensates for the hard work and the stress associated with the job, you need to be clear about your personal preferences.
Apart from the related stress, you also have to understand that the hedge fund industry is terribly competitive. If you do not have the right combination of passion and drive, handling the pressure can be a rather uphill task. You have to understand that along with theoretical understanding, you also need to have the will to handle the stress. Apart from this, your aptitude that can help you in becoming a hedge fund manager also includes other skills:
It is about how deftly you can handle money market pressure and anticipate developments. This will no doubt increase the rate of your success in a decidedly pronounced manner.
This essentially dictates the kind of drive that you bring into your profession. An efficient hedge fund manager will leave no stone unturned in getting the maximum value for efforts and initiatives.
This is one of the most intangible factors in the money market. Often people approach a hedge fund over others is simply the reputation of the fund manager. If the fund manager has a reputation of credibility and authenticity, a lot more people would be interested in investing in the hedge fund.
Reliability and reputation go hand in hand. If you want to understand how to become a hedge fund manager, it is extremely important to understand that reliability is important. If you have earned a name for yourself as a reliable hedge fund manager, you can easily gain better clients.
4. Don’t Stop the Learning Curve
Have you ever wondered what a hedge fund manager’s biggest asset is?
In many ways, more than the academic degrees or personality traits, it is the individual’s will to learn from experiences. Be extremely receptive to changes and the million new facts that are happening all around you. Never think that you know enough and there is nothing more for you to learn. That could very well be the end of your hedge fund career. If you want to become a hedge fund manager with a track record of success, you need to further the learning curve at every instance. If you are keen on becoming a hedge fund manager, it is extremely important to continue studying the field that you are working in.
There Is a Variety of Hedge Fund Specific New Journals and Reports
Detailed study of these can always help you in gaining better insight and depth about the hedge fund industry. It also stays on top of the latest innovation and trading trends. As you invest time in learning about the various mechanism of the hedge fund industry, your prowess also improves. This acts in your favor, and you are able to sharpen your skills further. Another major source of learning is how other major hedge fund managers are conducting their trade.
Often the lessons that they offer by simply following the trading methodology that they adopt is quite inspiring. Pretty much like the ancient times, when the teacher taught more by experience, you can just choose any legendary hedge fund manager. By just following their unique trading method to garner more experience, you can learn to master the art of investing their way. This process is very handy and often yields far better results compared to what you would learn from books.
5. Create Relationships
In the world of finances and especially if you want to become a hedge fund manager, you cannot deny the role of active networking. We mentioned it a little earlier in that how one can advantage of gaining the education in the top schools is an opportunity to build relationships. The dynamics of the financial industry is pretty dependent on relationships. Therefore, it goes without saying that becoming a hedge fund manager is a lot about creating lasting relationships as well. Often the relationships that they establish can help further their trade a lot more active than otherwise. Whether you need capital to start your fund or willing investors for the new fund that your company is launching, these relationships can go a long way in furthering your necessity.
Even if it is simple advice or a confirmation of the key policy that you are following, these relationships can be rather handy. They do not just help you with additional insight, but often for hedge fund managers, this becomes the necessary reiteration of their beliefs. On the whole, you must understand that strong relationships and networking often form the foundation of a thriving investment career that you aspire to have. Networking comes in rather handy for a hedge fund manager when you float a new fund.
Hedge Funds Hardly Have Any Promotion
Unlike mutual funds, hedge funds hardly have any promotion. So these networking channels can always take the word forward for you and help spread the word about the new fund that you might be floating. On the whole, networking also results in quick dissemination of information in the known circle. This enhances the acceptance and performance of the fund that you might be associated with it. Needless to mention it also helps in creating a better response and as a hedge fund manager, it is of primary importance for you.
6. Make a Beginning
Let’s say you get a great degree from a top rated financial/business school. But does that mean you can instantly become a hot shot hedge fund manager?
To learn how to become a hedge fund manager, it is essential to have patience and start from the bottom. That is a primary prerequisite. This hands-on experience in the field will go a long way in sharpening your financial acumen and strategising prowess in a far more effective manner. Even the best of the books can’t prepare you that efficiently. This is why you must join any hedge fund at the beginning as a hedge fund trader/analyst and then go on to become full-fledged hedge fund managers eventually. The benefit of this kind of hands-on training is you are not dependent on any theory or idea or even a style of working. You are in sync with ground realities, and this type of first-hand experience always helps you in improving your personal investment maturity and understanding.
Developing the Gut Feeling and Instinctive Trading Nuances
In many ways, this also helps you in developing the gut feeling and instinctive trading nuances. Perhaps you haven’t realized, but gut feeling is an inseparable aspect of successful trading. Gaining first-hand experience at the junior levels also helps you in furthering your networking skills. There is no better way than being at the hub of all the activities and then building better relationships based on that. Often relationships that you forge at this level of your professional journey stay with you forever. They can help you achieve many successful feats and take you relatively higher in success filed. Another big advantage for those working in the hedge fund industry is that they can easily understand the latest trends and follow them closely.
7. Marketing Plan Is Crucial
Becoming a hedge fund manager is also a lot about becoming a strong marketing person. You have to understand that the hedge fund that you create or you are trying to sell is as much a product as toothpaste in a grocery shop. Therefore, just like the toothpaste needs some bit of planned promotion and marketing, the hedge fund too needs the same type of care and concern. Therefore, a hedge fund manager has to be a deft marketing person as well. This will guarantee a strong upward journey for the fund over the longer term. As a hedge fund manager, a strong marketing plan will act like an insurance against future failure. Proper marketing will make sure that the response to your product is positive.
Marketing is not just about strong promotion. It also means that you need to present the product suitably and in a completely acceptable manner. To become a successful hedge fund manager, it is important to pay attention to even the smallest details like letterheads and business cards. That will ultimately create a sustainable image and long-term accountability for the product that you present to investors.
8. Look for Unadvertised Job Opportunities
Becoming a hedge fund manager isn’t simple at all, but you can value add and make it a winning proposition by introducing some simple tips.
First and foremost, how do you go about looking for jobs?
Newspaper clippings, postings on job sites and reference based interview calls are passed. Try out a brand new approach. Make information as the ultimate power. Use your hunger for knowledge and curiosity for excellence the channel to drive future growth in a sustained and stable manner. So how exactly would you go about it? Make a list of some of the rather dynamic hedge fund houses and make information based calls to them. When you place this kind of calls looking for information to these small and dynamic hedge funds, they will be able to identify the passion that you bring to your job.
It is needless to mention that this becomes a great way to grab training and job offerings with the great pay scale. Also, this type of initiative highlights your passion and commitment towards becoming a hedge fund manager. As a result, this becomes the first step towards gaining the respect and acknowledgment of your fellow colleagues.
It also makes you a more valued employer.
This makes the journey up the hierarchy ladder a lot smoother. This further improves the chance of your job being a far better fit in terms of suiting your passion and proficiency. You can approach the shortlisted firms, explain who you are and then offer to take them out for coffee or a treat. In return, make a simple request to learn more about what the hedge manager does and the related details. Use this as an active source of enhancing your network as well. Therefore, this acts in a two-fold manner to further your dream of becoming a hedge fund manager.
9. Aggressively Apply for Hedge Fund Manager’s Jobs
The hedge fund space is identified by severe competition and stiff peer pressure. Therefore, applying for jobs as hedge fund manager can’t be simple either. Don’t keep waiting for an advertisement about the job vacancy. It is extremely important:
- To approach companies on a one-on -one basis;
- Connect with a variety of hedge fund groups and journals;
- Add a CFA or CHA designation to your repertoire;
- Attend conferences to connect with famous professionals;
Once you have applied to a hedge fund, don’t just rest easy. It is always great to wait for a few days and then follow up with a phone call.
When you are exploring how to become a hedge fund manager, remember that most firms are looking for smart, committed and passionate professionals. Therefore, if you have the relevant degrees from some of the best academic institutions, simply get on with the job. At the initial level, working as an intern can be a great beginning towards becoming a hedge fund manager. If needed, you can even consider doing more than one internship. This deepens your experience and at the same time, improves your networking capabilities.
Last but not the least, nurture your network really well. A great hedge fund manager makes meaningful gains from the network and often becomes one of the strongest foundations of growth for their career. So if someone asked you today, what is a hedge fund manager, you could lucidly explain that a hedge fund manager is a visionary who can market their product aplomb and make adversity an opportunity for them.