How to Get a Job at a Hedge Fund?

7 min read

By Chainika Thakar

Getting a job at a hedge fund has been a dream for several individuals who are extremely inclined towards financial markets. Such individuals constantly keep a check on financial markets on an everyday basis. In this article, we will discuss hedge funds from the perspective of job seekers in this role.

This article covers:

What is a Hedge Fund?

A hedge fund is an investment fund which uses pooled or accumulated wealth from the investors. The main aim of a hedge fund is to implement such trading strategies which help earn the maximum gains to all the investors as soon as possible. Hence, they focus on short-term gains. Also, they use borrowed or leveraged funds for the same purpose of maximising the returns to the investors. Although, because of the risk involved with leveraged funds, hedge funds in the U.S.A and Europe were regulated following the financial crisis of 2007-08 in which the main reason for the crisis was increasing debt in the banking and financial institutions.

Next, we will see the types of jobs available at a hedge fund.

Types of Jobs at a Hedge Fund

As a hedge fund professional, you have a variety of job opportunities to choose from. Let us find out in brief about the types of jobs at a hedge fund.

These are:

  • Execution Traders
  • Investment Analysts
  • Portfolio Managers

Execution Traders

Execution Traders are the ones who come up with new ideas and execute the same. Also, some traders execute the ideas but do not generate them.

Investment Analysts

These are the ones who put a lot of effort into doing the research, generating new ideas and helping the managers with crucial decision-making regarding investing. Investment analysts are also known as research analysts.

Portfolio Managers

Portfolio managers are the ones who make the critical decisions regarding what to buy/sell and where to make investments. They also work to confirm the authenticity as well as the correctness of the research and findings of investments analysts. In case there are any discrepancies or issues in the research, they ask the investment analysts to review the report and correct the same. After this, the portfolio manager takes the final decision of buying/selling for investors.

Going forward, we will find out the educational requirements as well as skills required to get into a hedge fund.

Educational Requirements and Skills Required

To become an employee at a hedge fund, you need to have your bachelor’s degree in one of the following:

  • Finance
  • Accounting
  • Statistics
  • Economics
  • Engineering/Mathematics

Apart from the bachelor’s other preferred qualifications are:

  • MBA (Master of Business Administration)
  • MS Finance (Master of Science in Finance)
  • CFA (Chartered Financial Analyst)
  • CFP (Certified Financial Planner)
  • CTFA (Certified Trust and Financial Advisor)
  • CAIA (Chartered Alternative Investment Analyst)
  • FRM (Financial Risk Manager)

Basically, you are preferred to have a few certifications and a passion for studying the financial markets. Moreover, having specialisation in one of the fields will help you tremendously in your career as a hedge fund employee. This is so because each field offers the knowledge unique to a particular role. For instance, having a piece of thorough knowledge in finance and accounting can help you with the analysis for investment.

Moreover, more than any qualification, sound experience in the field will help you gain the maximum expertise in your chosen role.

Also, there are some skills which can help you at a hedge fund, and these are:

  • Quantitative analysis - In a quant related job, you can find yourself getting the best skill-development time. You can opt for an economist position or a financial analyst position or can even write a thesis for getting this skill.
  • Managing the investment - This is one of the most critical skills at a hedge fund. With the experience in managing your own investments, you can be ready to manage investments for a hedge fund as well.
  • Sound at discussing technicalities - You should be sound in discussing complex analytical or technical information into layman’s terms to be able to help investors with some jargons.
  • Strong mathematical and statistical skills - These skills may or may not be mandatory at a hedge fund. Some knowledge of mathematics such as linear algebra can be needed for applying machine learning models in your work.
  • Risk management - You must be knowledgeable about managing risks since hedge funds are sometimes high-risk investments which also procure high return simultaneously. You can become a risk analyst at the entry-level in the hedge fund as well.

Moving forward, there are some more skills/ways we will discuss to start your career at a hedge fund.

Some More Skills/ Ways to Start a Career at a Hedge Fund

So, the main question is what else do hedge funds look for while employing?

Of course, a set of interview questions and putting efforts in preparing for some really important topics such as logical reasoning, Python etc. beforehand will help a quant to get into a hedge fund tremendously.

Also, it is not that the skills we discussed above are the only ways to enter a hedge fund and start your career in one. There are some other things which you must invest in for getting a job at a hedge fund, and they are:

  • Reading
  • Internship
  • Continuous learning
  • Professional/Trading experience
  • Staying focused
  • Networking

Reading

Wanting to get a job in a hedge fund also brings with it the need to acquire as much knowledge as is possible about the same. And, there is nothing better than reading a lot of investment oriented books. You can find some very knowledgeable books online which you can refer to. Only as much as 20 minutes of dedicated reading from your busy schedule can help you gain enough knowledge.

Internship

For learning the trading secret and to acquire professional knowledge beforehand you must start early and become an intern. After a thorough reading and acquiring some good theoretical knowledge, the next step is to gain some practical experience as well. With an internship, you will get an excellent opportunity to absorb the working of a hedge fund.

Continuous learning

Understanding the good and bad investment is of utmost importance here. You must reflect on those investments of yours which do well and learn from the ones that did not. Continuous learning is also very important when it comes to starting a career at a hedge fund.

Professional/Trading experience

A great professional experience at a hedge fund is the best way to kick start your career. Learning how to build a strong hold on valuation and being good at excel can help you in numerous ways possible. Moreover, you need to trust your decision making and find out the best position in the market. This way your skillset will be viewed as an asset.

Staying focused

Once you start off in one role, it is best to stick to it for the rest of your career instead of trying to jump on to another role. This way, any new hiring will not be a trouble for you at any point of time. Apart from you becoming confused with two roles, your employer can also be doubtful about your commitment and dedication toward a stream.

Networking

Networking is another crucial aspect of getting a job at the hedge fund. When you wish to do something for the first time, apart from reading, getting experience or internship, you must also connect with those who are already familiar with the role and can help you enter the role. This way, you will be able to learn a lot from the steps they utilised to break into the industry.

Now that you have found out the types of jobs, educational requirements and skills needed to work at a hedge fund, let us take a look at the list of top hedge funds further.

Going forward, let us find out the pros and cons of working at a hedge fund.

Pros and Cons

Working at a hedge fund brings you plenty of options and along with that several benefits but there are some unappealing downsides as well.

Let us first take a look at the pros of working at a hedge fund:

  • Hedge funds, being smaller, provide greater control to the employees
  • It provides a highly rewarding career since some have also been found drawing $5 million a year
  • In a hedge fund, you usually get the opportunity to move up the ladder quickly as the hedge funds compensate well for the hard work

Now, we will find out the cons of a hedge fund, which are:

  • Lot of competition can make you overwhelmed
  • Responsibilities are quite a lot as the hedge fund is accountable for the money of all the investors

Going forward, you can now explore a list of top hedge funds to work for in the next subtopic.

List of Top Hedge Funds to Work for

With several hedge funds out there in the world, working in the top amongst them can provide the breakthrough for any employee. The ones which provide the best employee satisfaction are the biggest players in the industry.

Let us take a look at the list of such hedge funds which I have procured from Comparably and find out why they are considered the best:

DE Shaw

This firm has gained the top ranking as employees have given it the rating of 90 out of 100 which has made it the best firm to work in out of all the competitors. DE Shaw started as a pure quant fund and makes use of computer driven analysis combined with the fundamental strategies. This is the reason the firm is also known as ‘quantamental’.  

Two Sigma Investments

Having gathered an employee rating of 80 out of 100, Two Sigma Investments is at the second rank as it is the most highly rated immediately after DE Shaw. Owing to the work culture, a significant payment to the employees and the facilities, this firm is ranked the second best hedge fund to work at.

Citadel

With the work culture rated 4.3 out of 5, and decent pay to the employees, Citadel ranks 3rd in overall employee satisfaction. It offers the opportunity to grow and earn to all its employees.

Also, from the reviews by Glassdoor, there are two hedge funds which are considered the best by employees and they are:

Bridgewater

With the employees’ review of 4.1 out of 5 and 100% approval of the CEO, Bridgewater Associates holds a good reputation with regard to work culture and salary.

Renaissance Capital

At Renaissance, employees’ satisfaction rate is 3.6 out of 5 and it has been seen as a firm which pays well and regularly apart from being a decent place to work.

Conclusion

Since getting into a hedge fund is a dream for many it is quite important to gain a thorough knowledge of the field and act upon the requirements to get into one. To start your career in a hedge fund, you must start early and gain as much knowledge in the practical field as possible. Apart from the knowledge, it is crucial to gain experience in the field before you step in and start a career at a hedge fund.

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