At 9:35 AM Monday 24 August 2015, even the stunning 1089.42 peak market drop was insufficient to signal the end of the current bull market. As previously discussed here, the DJIA would need to plunge to 14,681.12 to mark the official end.

The fact that the market is rebounding as this post was being written suggests the bull still has some run left, but hedge fund investors want to know if the strategies they’ve bought into will preserve their capital and offer them some reasonable gains. Hedge fund returns have been dogged by comparisons to S&P 500 returns but that ship has sailed in the wake of recent market losses.

Fed Rate Hike

A hike in the fed funds rate would almost certainly create additional market woes, opening a new range of options for investors. However, the prospect of an FOMC decision in favor of a September rate hike is diminished by the current volatility we are seeing in the stock market and by other significant events. Unlike U.S. markets, China has experienced no similar rebounds. In fact Asian markets are weak across the board.

Other factors include the continued decline of the middle class, the failure of household income to rebound, understated unemployment, new lows for oil, North Korea’s saber rattling, Assad’s use of SARIN gas on civilians in Damascus, the doubts surrounding the approval of the Iranian nuclear deal and the general malaise in the global economy. These represent a few of many issues which must be considered before Janet Yellen announces a hike in the fed funds rate.

Most experts agree that a rate hike would result in at least a modest market sell-off. Is this something the FOMC would like to see on the heels of the recent market declines? Probably not. After all, a rise in rates would send a signal that the FOMC is content with the direction of employment and GDP growth, yet concerned with rapid wage hikes and inflationary pressures.

Additionally, the FOMC is keenly aware of under-employment numbers, cognizant of the less than robust growth in GDP, understands that inflation is below the 2% trigger and must acknowledge that wages are at best, stagnant. In short, none of the criteria the Fed Chair has publicly stated will be required to trigger a rate hike has been met.

The decision to hike or not to hike will be a test of the integrity of Janet Yellen and her FOMC.

A  Test for Hedge Funds

It is exactly this environment that offers the potential for hedge funds to demonstrate their intrinsic value and silence the critics, if not forever, certainly for some time to come. The S&P 500 is in the red year-to-date. U.S. markets are moving in both directions instead of one and hedge funds were born to thrive in just these circumstances.

What This Means for Hedge Fund Jobs

In the short-term, job opportunities in the hedge fund industry will remain flat. However, if hedge funds navigate these troubled waters effectively and profitably, hedge funds should reap an influx of investment dollars. Such an influx would improve employment opportunities in the industry.

Bookmark and Share

{ 0 comments }

The DJIA has plummeted, GDP has grown at a glacial pace and the number of Americans participating in the labor force is at its lowest level since February, 1978. Understandably, many having an interest in a hedge fund career are skeptical of the opportunities.

The Facts Paint a Different Picture

The hedge fund industry is growing. Although a number of high profile funds have been shuttered, the pace of hedge fund startups has exceeded closings through all of 2015. More importantly, hedge fund assets under management have risen year-over-year for the past 6 years and stand at a record $3.16 trillion, a 68.98 % increase over its 2007 high-water mark of $1.87 trillion.

Here’s where it gets interesting. Fully $2.78 trillion of hedge fund assets under management (AUM) is controlled by around 570 managers in a subset of 5,122 single-manager hedge funds, this according to Preqin, an industry data provider.

Tip # 1: Narrowing Your Search

Of these 570 single-manager behemoths, 202, managing $1 trillion, are physically located in New York and coming in a distant second, is London with 83 such firms managing just north of one-third that amount.

Logically, any job search should begin in the “Big Apple” because it is home to such a robust number of the largest hedge fund firms. Common sense would also suggest that larger funds are more likely to have open positions. Confirming this, to some degree, are Preqin’s findings, which suggest the largest funds attract the most investment dollars. Naturally, as assets increase, the need for staff must also increase.

Tip # 2: The Right Alma Mater

While there are those who blather on about which school to attend to give you the best shot at being hired by a hedge fund, the only thing that actually matters is your ability to generate gains for your investors. This has far less to do with your alma mater than with analytical skills, street smarts, and experience.

While attending the “right” school may land you a few more interviews than counterparts who have not attended the ‘right” schools, typically those who can demonstrate the ability to make money through creativity and analytical finesse will actually land a position.

It is much more productive to focus on developing hard skills than worrying about the schools you have, or have not, attended.

In Conclusion

Landing a job with a hedge fund is challenging work in itself. Starting your search in the cities with the highest concentration of large hedge funds can make the objective easier to attain. A focus on gaining and perfecting the necessary skills to compete for that hedge fund job is far more important than having an Ivy League pedigree.

Always remember, hedge funds are the most competitive and bottom line focused sector of the money management industry. A good school may open a few doors, but the only thing that guarantees a job is proof of your ability to drive returns.

Bookmark and Share

{ 0 comments }

She Loves Me, She Loves Me Not

July 27, 2015

Hedge fund returns are in the red for the first time this year, with an average reported negative gain of 0.75% in June. The Federal Open Market Committee’s (FOMC) decision against an increase in the Fed Funds rate is perceived by many to be the principal driver behind the current bull market and, incredibly, the […]

Read the full article →

Hedge Fund Social Media Presence Draws Increased SEC Scrutiny

July 13, 2015

Hedge funds have been measured in their adoption of social media. This may be attributed to an ingrained culture of “secrecy” brought about by government regulation that imposed a ban on general solicitation for almost eighty years. This ban was lifted by passage the JOBS Act more than three years ago and hedge funds are […]

Read the full article →

Analyzing the Impact of Gay Marriage on Hedge Funds

June 29, 2015

Regardless of opinion, gay marriage is now the law of the land and the nation must begin the difficult task of sorting out the various legal, financial and other implications inherent in the Supreme Court’s decision. The focus here will be on the potential economic impact of legalized gay marriage, particularly as it relates to […]

Read the full article →

It’s Showtime for Hedge Funds

June 15, 2015

In case you hadn’t heard, Showtime has inked a deal with Andrew Ross Sorkin, of Too Big to Fail fame, for twelve shows in its new series … Billions. The fictional drama features a New York U.S. attorney as the protagonist and, that’s right, a hedge fund billionaire as the antagonist. Paul Giamatti, who played […]

Read the full article →

Hedge Fund Managers as Political Targets

June 1, 2015

The Forbes 400 list of the wealthiest Americans reveals that only 7 of the top 100 are hedge fund managers and the first hedge fund manager on the list is George Soros, ironically the most left-leaning multi-billionaire on the planet. So why are hedge fund managers under attack? Public Perception Hedge funds are largely misunderstood […]

Read the full article →
Real Time Web Analytics