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.
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.