How To Get A Job In The Hedge Fund Industry

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One of the most fascinating aspects of Wall Street culture is how contradictory it can be. On one hand, Wall Street takes pride in projecting a staid and conservative image; on the other hand, even the biggest investment banking firms will not hesitate to follow new trends and adopt them as long as they show […]

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April 26, 2021 5 min read

This story originally appeared on ValueWalk

One of the most fascinating aspects of Wall Street culture is how contradictory it can be. On one hand, Wall Street takes pride in projecting a staid and conservative image; on the other hand, even the biggest investment banking firms will not hesitate to follow new trends and adopt them as long as they show considerable moneymaking potential. Hedge funds are clear examples of this contradiction because of how much they have been vilified in recent years despite bringing substantial revenues to Wall Street.

Q1 2021 hedge fund letters, conferences and more

For all the sensational headlines published about them, hedge funds are investment houses that do not usually operate in the same way other Wall Street firms do. Hedge funds manage assets and seek to maximize profits for private clients. Unlike mutual funds managed by the likes of Goldman Sachs, hedge funds are not open to the public, which is why they are often referred to as private equity funds open only to accredited investors who can deposit at least $1 million.

Employment Statistics of the Hedge Fund Industry

According to market research firm IBIS World, nearly 70,000 individuals were working at hedge funds based in the United States as of late 2020. Since 2016, the size of this workforce has increased at an average annual rate of 2.5%, but market activity in 2021 suggests that we will see a greater expansion of the hedge fund industry over the next few years. What this means for those looking for work in this sector is that they will have increased chances of getting hired thanks to higher demand.

What a Hedge Fund Job May Entail

Similar to investment banking firms, the operational complexity of hedge fund management requires coordination from various segments, which may include the following:

  • Administration
  • Trading
  • Investing
  • Technology
  • Accounting
  • Legal
  • Human resources
  • Marketing
  • Client relations

The jobs that most hedge fund applicants look for tend to be in the investing and trading categories; the reason for this is that this industry has shifted towards quantitative analysis strategies in order to deliver the kind of performance that clients are looking for, which means that managers, traders, and researchers have a greater potential of earning lucrative salaries plus bonuses. It should be noted that professionals who work in the client relations and marketing departments of hedge funds are also entitled to handsome compensation, particularly during the stages when the funds are either getting their initial batch of clients or when they are going through expansion periods.

The Skills That Hedge Fund Managers Look For

Anyone who has experience working in investment banking will have an edge when they look for a hedge fund job. Aside from the trading and investing categories, working conditions at hedge funds are about the same as in other Wall Street investment shops, particularly boutique firms, but some hedge funds are known to pay higher salaries and better incentives to their support personnel. Having established this, accountants and paralegals who have worked at places such as Morgan Stanley or Fidelity Investments will have a better shot at getting hired by hedge funds.

For those who are looking to get into the actual trading and analysis departments of hedge funds, the key is to show knowledge and education in quantitative finance because this is the route that most hedge funds have been taking over the last decade or so. Applicants with degrees in computational finance, for example, will have a better chance than those who have work experience at the trading desks of Wall Street market makers.

One common complaint that hiring managers at hedge funds often voice is that they cannot find candidates that are familiar with the industry. Candidates who do not have the benefit of quant degrees should look into specialized certifications such as Chartered Hedge Fund Associate or Chartered Financial Analyst. An accountant who holds a CFA certification, for example, would be very attractive to a hedge fund manager.

In some cases, the skills required by hedge funds are highly specific. A fund that makes money on high-frequency trading, for example, would look for IT network administrators who specialize in server colocation. Another fund may look for analysts who have experience in commodities trading if this is part of their strategy.

Getting Hired by an Investment Firm

Despite all the hoopla about private equity being a shadowy financial sector, the reality of hedge funds is that many of them use traditional methods to look for candidates. LinkedIn is one of the best sources of hedge fund job postings, which means that having an updated profile therein is of the essence. Hedge fund managers are also known to make use of recruiters who in turn search for candidates on LinkedIn.

Internships are slightly trickier within this industry. Firms such as BlackRock and Renaissance Technologies are not known to hit up college campuses looking for graduates of finance programs. Many university graduates have landed hedge fund internships by means of connections they have made on LinkedIn, CrunchBase, and other business social networks. Once students have established solid connections with hedge fund professionals, they should not be afraid of inquiring about internship opportunities.

The best way to look for jobs at hedge funds is to deal directly with the two organizations dedicated to the self-regulation and expansion of this industry. Membership in the Hedge Fund Association, the Hedge Fund Group, or the Chartered Financial Analyst Institute can go a long way in terms of learning about new available positions or getting an edge over other applicants competing for job postings.