From the category archives:

Hedge Fund Careers

Male portfolio managers outnumber women 20 to 1. This might suggest gender bias on the part of hedge funds. However, it might also suggest that women aren’t seeking this line of work. How can the facts be known?

For example, 34 percent of doctors in the United States are female, about one in three. According to the U.S. Census Bureau, the number of men in the nursing profession stands at 9 percent. Is anyone suggesting that the nursing profession has a gender bias?

How about, dietitians, nutritionists, teacher’s assistants, and occupational therapists—only around 10 percent of these positions are held by men. Is this gender bias? Male conductors and yardmasters outnumber women 20 to 1. Where is the outcry? Isn’t the gender bias equally evident in this profession?

Is It Possible?

Let’s go way out on a limb here and consider the possibility that many women may not aspire to a position in the hedge fund industry. Of course, such a headline will not attract readers. It is much easier to malign an entire industry and gain clicks than it is to venture out onto a politically incorrect limb. However, for a variety of reasons, many men have no desire to work in the hedge fund industry either. That may say something about the hedge fund industry but, it certainly doesn’t say that it is prejudiced against women.

The Truth Is

Hedge funds would very much like to see more women entering the profession. In part, because of the bad rap the industry is confronting, but mostly because hedge fund managers are intelligent, and understand that excluding one-half the population diminishes their ability to find great talent.

The hedge fund industry is all about results and if women make those results happen, they will be welcomed with open arms. The industry is a meritocracy, not an old boys club. Headlines that imply gender prejudice in the hedge fund industry become a self-fulfilling prophecy. If women are led to believe that pursuing a career in hedge funds will result in a constant battle between the sexes, then fewer women will choose this pursuit. In short, those in the media making these assertions are creating unwarranted headwinds for women.

What About Hedge Fund Jobs?

If you are a woman, this is the best of times to pursue a hedge fund career, in part, because hedge funds are anxious to shed the gender bias label, but largely because there is a shortage of talent in the industry.

Hedge funds are finding high levels of competition with tech firms for talent, particularly for quant and data scientists. This talent, male and female, has their pick of places to work. This talent, regardless of gender, is seeking a modern and diverse work environment. Hedge funds must make a greater effort to accommodate them or they will bring their considerable talents to other industries.

Women harboring an interest for a career in the hedge fund industry will find no better time than now to throw their collective hats into the ring.

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Contrary to popular opinion, earning an MBA will not necessarily earn you a spot in the hedge fund industry. According to the 2017 Hedge Fund Compensation Report, just 4 percent of those surveyed were hired by a hedge fund as students graduating with an MBA.

This is not to minimize the value of an MBA in the industry. In fact, the report revealed significant salary advantages for MBA holders, with MBAs earning about 17 percent more than non-MBA peers in terms of base pay. The size of an MBA’s bonus also exceeded his non-MBA peers, in some instances by 73 percent!

However, the MBA cannot be realistically portrayed as a path to a job in hedge funds.

What Is the Path?

While there is no single answer to this question, one thing is clear; experience is a major factor in landing a hedge fund job. Those with investment banking, asset management and sell-side experience accounted for 35 percent of the hedge fund professionals participating in the survey. In short, experience seems to trump the MBA.

While it is demonstrably true that experience in investment banking, asset management and the sell-side will increase your odds of securing a position in a hedge fund firm, the actual appeal of the hedge fund industry is the extensive variety of backgrounds that enjoy the opportunity to make it into the industry.

The report referenced earlier demonstrates that people enter the hedge fund industry from a wide variety of backgrounds, including proprietary trading, public accounting, information technology, management consulting and a host of other fields—including the legal profession.

One may correctly infer that the hedge fund industry is open to applicants with diverse backgrounds, and, while it is true that certain backgrounds are more likely to result in hedge fund employment, the possibility of work in the industry is open to all.

The Internal Career Path

Hedge funds are shining examples of meritocracy. Experience, successful experience, is the key to advancement within the hedge fund firm. For example, if you are successful at landing a position as an analyst, it will take around three to five years to become a senior analyst. To reach the level of portfolio manager will require, on average, another three to ten years…if the opportunity presents itself.

This period is fairly well established in large-sized hedge fund firms, but less so in small to medium-sized firms. Consider acquiring a CFA to accelerate the path to portfolio manager.

Hedge Fund Jobs

The competition for hedge fund jobs is fierce. For those a couple of years out of college, recruiters, job boards and, most critically, the ability to shine in the interview process are the shortest road to a junior role in a hedge fund. Go to your interview focused on developing long and short ideas. Demonstrate industry knowledge and, of course, an understanding of what is happening in the markets.

Hedge funds are packed with alums, so any failure to tap that networking resource will be to one’s detriment. This is especially true for MBAs.

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What Will Be the Upshot of MiFID II on Hedge Fund Jobs?

June 26, 2017

Just as the regulatory mists were beginning to dissipate under President Trump’s Sharpie and the House’s legislative action, a new fog is rolling across the financial sector—MiFID II. Although driven by European regulators, it cannot be ignored by any financial organization that engages the European markets, and this includes the hedge fund industry. What Is […]

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What Does an Analyst Do and What Do They Earn?

June 11, 2017

Although there are more than a few avenues leading to a job in the hedge fund industry, it can be argued that an analyst’s position is a typical entry-level position. Make no mistake; although the term entry-level often connotes the absence of a need for skills, education, prior experience or other attributes, this is not […]

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Surprisingly Investors Remain Bullish on Hedge Funds

March 5, 2017

After an inglorious 2016, many pundits jawbone about a continued investor exodus from the so-called overpriced and underperforming hedge fund industry. However, the facts are in stark contrast to the rhetoric. January 2017 redemptions total $5.2 billion, about one-quarter of the $19.3 billion outflow the hedge fund industry experienced in January 2016. Furthermore, a substantial […]

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Hedge Funds Face Fierce Headwinds in the Fight to Grow Assets

December 12, 2016

It appears that the hedge fund industry, on average, will end 2016 on the wrong side of the S&P 500, the arbitrary benchmark, which in the eyes of many, heralds a successful level of performance. The S&P 500 is up some 10.5 percent year-to-date, while average aggregate hedge fund gains hover around 4.5 percent. Another […]

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I Got the Offer – Now What?

November 14, 2016

Everyone that breaks into the hedge fund industry asks themselves that question. The education, the experience, the network of contacts, the untold hours spent writing and re-writing resumes/CVs and cover letters, interviews – it ultimately ends with the negotiation of a compensation package. Prior to the finalization of this key hiring element all one has […]

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