If you’ve always been interested in the business side of things, having fun investing in stocks and controlling assets, working at a hedge fund might be the best place for you.
Working at a hedge fund is a fast-paced environment all about investing and making money. Whether you’re just starting out in the banking world or have been working in the industry for a while now, hedge funds are a wonderful place to work.
But, just how do you even get a job at a hedge fund in the first place? If your interest has been piqued and you want to start your career at a hedge fund, keep on reading to find out how you can hop right in.
While hedge funds don’t require you to come from one specific school or have a certain number of years in a professional bank environment, it does have some other preferences that will make getting the job so much easier.
First, hedge fund managers will love to see previous banking experience. Again, you don’t have to have a hedge fund experience to get the job, but if you have experience working as a banking analyst, you’re way ahead of the game already.
Most hedge fund companies look for future employers who are experienced with analysis, as this is the primary role you’ll find at hedge fund offices themselves.
Regardless, you must be familiar and comfortable with banking, finance, and investments. Accounting is a huge factor here, so having experience–either professional or educational–can be the difference between you and another candidate getting the job.
Make sure you’re fully knowledgeable about the process of hedge funds, how they work, and maybe even try investing in some for yourself.
This can give you firsthand knowledge and experience about these tricky investments, and definitely provide a leg-up on other candidates who may never have never dealt with a hedge fund before.
When it comes to schooling, you definitely must have a four-year degree from an accredited university. Your degree doesn’t have to come from an Ivy League university (though that definitely won’t hurt), and many admit that MBAs aren’t incredibly helpful to have.
Rather, if you went to a reliable four-year university, performed well, received good grades, and had an emphasis on banking, accounting, or anything related, you’re in a great position for working at a hedge fund.
Some hedge funds are beginning to specifically recruit college students, though, typically, it isn’t likely that you’ll get the job straight out of college. Instead, you’ll probably have to wait a few years and gain a bit of banking experience before applying for these types of jobs.
Again, make sure you have a clear passion for this type of work. If you can convince your employers that you’re animated about hedge fund work and demonstrate that you know what you’re talking about, you’ll be miles above the rest.
There are various different positions you can take within a hedge fund, including different team areas. Primarily, hedge fund companies are going to be divided into three groups: the investment team, the trading team, and the middle and back office.
All of these positions are just as important as the next, but we’re going to be primarily focusing on the investment team. The investment team is really where you’re working with the nitty-gritty numbers and doing the investments you’ve always wanted. Here are the main positions within this branch of hedge funds.
If you’re just getting started in the world of banking and investment, and haven’t had experience within higher positions just yet, you’ll probably be looking at the position of a junior analyst or research associate. A junior analyst at a hedge fund will essentially work to assist the senior analyst, documenting and gathering any information necessary.
As the lowest position in the company, this is a great place to start and make your way up. You can gain experience in the sphere you love most and become comfortable in such an environment. But, do prepare to work extra hard to prove yourself in this position. You’ll likely be some of the youngest members of the team, as junior analysts tend to be between 22-25 years old, fresh out of college.
It depends on the company, but the most junior analyst can make anywhere between 100K and 150K a year. So, while it is technically the entry position for hedge funds, you’re still getting paid almost thrice the national average. You also have the opportunities for various bonuses, raising your pay even more. After about two or three years, you’ll likely be eligible for a promotion.
Hedge Fund Analyst
After you’ve done your time as a junior analyst, or if you have experience in other banks, you may get a position as a hedge fund analyst.
This position isn’t too far off from a junior analyst position, and daily tasks are quite similar. However, as a hedge fund analyst, you do get a lot more freedom and independence than a junior analyst.
As a hedge fund analyst, you’re expected to speak directly with companies and investors, constantly monitoring the market. You’ll need to start generating your own investment ideas, working about 12-hour days to build financial relationships.
On a daily basis, you’ll deal with other hedge fund analysts, senior analysts, and even portfolio managers to ensure a well-oiled, communicated machine. You’ll likely stay in this position for about 3 to 4 years before moving your way up again.
The salary for a hedge fund analyst is a tricky one. It can vary completely depending on the company, bonuses, fund size, and personal performance. If you’re someone who is constantly going above and beyond, maintaining relationships and making investments, you could earn upwards of 600K a year.
Others will earn closer to 200K, again, depending on base salary and other factors. If you’re joining a smaller fund, your base salary will be lower, of course. More established companies are able to offer much more money.
Senior analysts are also referred to as Directors of Research. Senior analysts are responsible for various duties, most of which are specializing in one specific area or sector of the financial industry. You get to spend time pitching ideas directly to the Portfolio Managers themselves, where other analysts then go and determine the validity and ease of these ideas.
When you’re a senior analyst, you’re pretty much considered a fund manager “in training.” You’re training yourself to be prepared to manage all lower positions, while still working directly with analysts to ensure proper communication.
In this position, you’ll spend a lot of time working with management and building relationships/connections to help with future business deals. This is crucial for when you move up to even more prominent positions, as you’ve already established your trustworthiness and reliability.
The salary for a senior analyst varies once again. This salary can be anywhere between 500K all the way up to 1 million if your company is reputable enough. You probably won’t make that much during your first year in this position, but after building up your credibility and experience in this position, there’s definitely the opportunity to make six figures. You’ll likely be in this position for about five years before taking the next step–if your company is ready, that is.
Hedge Fund Portfolio Manager
If you’ve made your way to fund portfolio manager, you’ve made it to the very top. If you work at a hedge fund that is single-manager, then that’s you!
You’re the sole manager and have total responsibility for the company. Bigger companies tend to be multi-manager funded, so you and a few other managers will divide work evenly, depending on your individual skill sets and experience.
At the end of the day, hedge fund portfolio managers are going to have the final decision and say over trading and investment opportunities. As a PM, you’ll be responsible for varying daily activities depending on your company and your individual tasks.
Some portfolio managers focus primarily on risk management to help cut potential losses and prevent any meltdowns. They also work to ensure portfolio diversification and net exposure, as well as working with various non-investment opportunities to increase marketing and answer any and all financial questions.
Once you’re in this position, your salary can be extremely varied. Typically, you will make around 1 million a year being a manager of a hedge fund, but others, especially at bigger companies, can make up to 10 million annually.
All of this depends on experience though, and some managers have even started with a 500K salary. But, since this is the top position in the company, you have the potential to make nearly as much as you can handle. This also means that you probably don’t have anywhere else to go: you’re in the highest position at last!
Why Work at a Hedge Fund?
Working at a hedge fund is a wonderful place to start your financial career. Companies like these offer so many opportunities for growth, keeping you in the company for years until you’re all the way to the top.
Plus, they pay incredibly well, and you can easily thrive making the money that they offer, even at the lowest position levels. Not many other career paths can offer this, either; instead of struggling for years to make ends meet, you’re able to start making good money right off the bat.
When you work at a hedge fund, you’re also dealing with interesting, fast-paced work that will never have you bored. You’re turning global issues into investments, and those around you are some of the smartest people in your area.
This gives you a work environment that you’ll look forward to working in each and every day, despite the long hours. These companies are going to be smaller and give you all the attention you need.
Of course, there are some drawbacks to working at a hedge fund, just like there is anywhere else. But, you just have to consider these pros and cons to decide where or not this is a place for you.
Getting Hired at a Hedge Fund
Getting hired at a hedge fund may be a bit tough, but it definitely isn’t impossible. If you’re someone with credible experience, determination, and a passion for banking and investments, working at a hedge fund is definitely the place for you. You just have to be prepared to work your way up to get to where you want to go.