While opportunities for hedge fund careers are not abundant, they do exist. Past posts have touched on specific personality characteristics hedge fund recruiters seek when considering prospective candidates. These desirable traits include a competitive spirit, the ability to thrive on stress, self-discipline, an analytic mind, decisive, articulate, focused, and, goal oriented personalities.

Hedge fund jobs go to individuals who exhibit most, if not all, of these sought-after qualities. A lucky few are born with many of these persona defining attributes. The remainder must strive to develop them … not always an easy task.

Competitive Spirit

In the past, sports fostered a competitive spirit in children which carried over into their adult lives. However, in the age of un-scored T-Ball games, this competitive spirit is being diminished in favor of an “everyone is a winner” mentality.  Rekindling that competitive spirit is essential for those aspiring to a career in hedge funds.

Handling Stress

Stress in the hedge fund environment is inevitable. Those who thrive on stress have learned to accept it, engage it, adapt to it and learn from it.yoga_01

Self-Discipline

Gaining self discipline requires that one acknowledges weaknesses, establishes plans, limits temptations and maintains focus on long-term rewards.

Analytic Mind

Success in hedge funds, as in life, requires learning to think and reason, to understand the consequences of one’s actions and to make decisions that favor the best possible outcome. Most learn this through a series of life experiences but, in addition to experience, the ability to search out and integrate all available information and data into the decision making process is key.

Decisiveness

Decisive action is the product of an analytic mind.

Articulate

The ability to persuade others to follow a course of action previously viewed in a negative light is contingent upon one’s ability to articulate the merits of that course of action. Articulation also flows from the analytic mind.

Focus

Focus and self discipline are closely related, suggesting that one cannot exist in the absence of the other.

Goal Oriented

Achieving established goals is highly possible for those who possess the preceding seven traits and skills.

A successful career in hedge funds requires, at minimum, the skills outlined above but, even these do not guarantee entry.

Enhance Your Opportunities

A recent Business Insider article reveals another attribute that may improve your odds of securing a hedge fund positions—a willingness to work non-standard hours. UK-based hedge funds are rumored to be experiencing difficulty in filling middle office positions that require working late hours to cover US trading hours.

Although this requires a significant paradigm shift, considering an overseas hedge fund job may provide the edge needed to land a position. However, a willingness to work these unusual hours will not diminish the need to demonstrate the traits outlined above.

These traits, attributes and skills are interdependent. That is to say, all these traits are critical to success, not only in the hedge fund field, but in all of life’s endeavors.

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Hedge funds have always enjoyed a presence in the insurance sector but Warren Buffet has declared recent hedge fund forays to be a precursor to the decline of major reinsurance companies.

What Has Changed

Hedge funds have invested in catastrophe bonds and other insurance-linked securities for decades. However, Buffett’s concern is the recent phenomenon in which hedge funds are actually establishing captive reinsurance companies, typically in lightly regulated jurisdictions offshore.

This is of significant concern to traditional reinsurers because of the competitive advantage accruing to hedge fund-owned reinsurance entities. Beyond the obvious regulatory advantages, hedge funds are also in a position to leverage with borrowed cash, accept higher risks and invest premium dollars in high yielding strategies. The cumulative effect of these advantages results in lower premiums for potential reinsurance clients and this competitive advantage is what led Buffett to his dire prediction for conventional reinsurers.

Premature Concerns

The nearly $600 billion reinsurance market has substantial room for competition. Thus far, hedge reinsurers have but a fraction of the market at an estimated $5 billion. More to the point, hedge funds face an uphill battle in winning over potential clients. While lower premiums provide hedge fund captives an attractive marketing edge, they must also win the trust of potential clients.

The trust and confidence aspect of the equation does not favor hedge funds. Hedge funds are perceived to be interlopers, as opposed to mainstream reinsurers, which have the advantage of track records spanning generations and impeccable credit ratings. Hedge fund captives have been on the scene for under a decade and many remain unrated by the major agencies. For example, A.M. Best has rated Greenlight Re, Third Point Re, PaCRe, Hamilton Re and Watford Re, but Moody’s has not.

As a result, the playing field is more level than it may appear at first blush.

The Fly in the Ointment

The Internal Revenue Service (IRS) has shown interest in this relatively recent hedge fund ploy and may act to remove loopholes which allow hedge fund managers to reduce tax liabilities by channeling investments to insurance companies in offshore, low tax jurisdictions.  None-the-less, hedge funds continue to surge into the reinsurance business, secure in the knowledge of the difficulties the IRS faces in justifying changes to current tax law.

The Jobs Effect

Many established reinsurers are partnering with hedge funds in an apparent “if you can’t beat them, join them” mindset. These so-called side-car structures allow the hedge fund to focus on investment while the partner manages underwriting risks and business development. This reduces start-up expenses and leverages the management strengths of each partner.

Logically, there will be increased opportunities for employment in the hedge fund industry for anyone with experience in the reinsurance field. Those with the ability to bring clients to alternative reinsurers would be particularly advantaged.

Conversely, those on the investment side of a reinsurance partner may have enhanced opportunities to transition to the partner hedge fund.

These are exciting times for both industries and time will be the judge the success or failure of these strategies.

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Has Yellen’s Rhetoric Painted the Fed into a Corner?

April 20, 2015

Uncertainty regarding the timing of Federal Reserve interest rate hikes continues to churn as evidenced by increased market volatility. Federal Reserve Chair Janet Yellen has long insisted that any rate hike will be predicated on the nation’s unemployment figures and March yielded a paltry 126,000 new jobs. This is a dramatic 57 percent decrease from […]

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The Redeeming Social Value of Hedge Funds

April 6, 2015

The term hedge fund is synonymous with sinister and secretive in the minds of many. However, this much maligned industry controls in excess of $3 trillion as represented by its collective assets under management and it continues to grow this impressive figure year-over-year. Hedge funds have earned this unenviable public ire through no fault of […]

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Signs Point to a Grand Year for Hedge Funds

March 23, 2015

Hedge fund detractors, never weary of bashing the hedge fund industry, will see 2015 shaping up to be a substantial source of frustration. Why? Because hedge funds are a galaxy away from being down and out. The number of hedge funds has grown from a post financial crisis low of 6,845 in 2009 to a […]

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The Werewolf of Wall Street

March 9, 2015

By now, everyone has heard something of the theft allegations the SEC has leveled against New York hedge fund manager Moazzam “Mark” Malik. This thirty-three year-old is alleged to have stolen about $850,000 from 16 investors, foreign and domestic, beginning in 2011. New York’s Attorney General Eric Schneiderman has filed criminal charges against Mr. Malik, […]

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Women May Enjoy Enhanced Job Opportunities in Hedge Funds

February 23, 2015

Read any compilation of the 50 top performing hedge fund managers and the absence of females on the list is glaring. Women are unquestionably active in the hedge fund industry. However, a woman has yet to be named to the top 50 … at least thus far. Few professions come to mind that sport a […]

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