Those who are just starting their career in finance and who want to enter the exciting world of hedge funds often begin with a job as an investment analyst.
A hedge fund analyst typically has a well-developed passion for following the stock and bond markets and likes to develop ideas on the direction of the markets or particular securities.
Junior research analysts usually have a university degree and one to three years of full-time work experience in financial services. Mid-level and senior analysts may have earned an MBA degree and have five or more years of full-time work experience.
As an analyst at a hedge fund, you will be performing in-depth research and analysis and due diligence required for investment decisions. You will be supporting an investment team or working with senior analysts and portfolio managers in supporting their investment decisions for the fund.
The career path for analysts in the hedge fund industry is much less structured than in other financial sectors, such as investment banking. There are fewer titles and levels. A junior analyst may work for two to four years before either being promoted to senior analyst or leaving the firm. A senior analyst may be promoted to portfolio manager. The titles at a hedge fund are more an indication of how much direct input a person has into the investment decisions at the fund.
However, professionals who thrive at hedge funds often like the meritocratic nature of the work. Individual excellence is easy to notice and recognize, and the compensation that goes along with hedge fund jobs reflects that. Talented hedge fund analysts who demonstrate their investment expertise can move ahead quickly in the career, often within three or four years of joining a firm. Whereas a similar level of success (and compensation) can take a decade or more in investment banking, and perhaps several decades at a large corporation.
Next time, we’ll look at the specific tasks that analysts do at hedge funds, from the junior to senior level.