From the category archives:

Hedge Fund Careers

Let’s ensure that we are on the same page before diving into this topic. Reflation, in the context of this article, refers to implementing a government’s fiscal policy and/or a central bank’s monetary policy in a manner that halts or reverses a deflationary trend. A government’s fiscal policy may include, for example, cutting taxes, or making substantial investments in infrastructure projects.

The central bank’s tool kit would include raising/lowering interest rates and, more recently, quantitative easing. Quantitative easing is the large scale purchase of assets, usually bonds, from banks with an eye toward stimulating the economy. Quantitative easing accomplishes this by increasing the money supply, reducing the cost of capital and stimulating investment.

What Is Reflation Supposed to Accomplish?

A reflation policy is intended to alter the trajectory of a deflationary trend in which the prices of goods and services decline. It is important to note that deflation is not synonymous with disinflation, which is defined as a slowing of the rate of inflation.

How Does Reflation Affect Investors?

As stated earlier, reflation may be implemented via the central bank by increasing interest rates. Such increases will cause the price of existing bonds to fall because they will be forced to compete with new bonds issued with higher yields. Many investors will elect to sell older bonds in favor of purchasing new bonds issued with a higher yield. These are actually called reflation trades.

In terms of equities, historical data show that P/E ratios tend to rise as the rate of inflation increases from greater than 1 percent through less than 3 percent. This fact will impact investment decisions for many investors.

What Is the Effect of Reflation for Hedge Funds?

Hedge funds are investors too, and, as such, must be constantly alert to government and central bank policies that impact the markets. This is particularly the case in the era of Trump, as many of the administration’s policies are deflationary in nature, such as tax cuts and the proposed infrastructure expenditures.

One can sympathize with President Trump’s concern regarding the Federal Open Market Committee’s (FOMC) plan for continued interest rate hikes, which, quite literally, would compound the effects on inflation—effects that were already being brought about by the government’s tax cut and administration plans to step up infrastructure spending. Although roundly criticized for interfering with the course FOMC chair Jay (Jerome) Powell had set, President Trump’s concerns were most likely justified.

Allocations are likely to grow as investors recognize the favorable returns occurring in growth assets and analyze risk in terms of opportunity cost.

What about Hedge Fund Jobs?

Hedge funds enjoyed strong gains in January, with a 1.53 percent gain in HFR’s asset weighted composite index. While not as robust a start to the New Year as 2018’s January gain of 2.74 percent, it is a welcome change in comparison to last year’s overall negative performance, which saw the asset weighted composite index close down (-0.84 percent) for the year.

While the job prospects for mid-level hedge fund professionals remain tight, demand for entry level, back office, and other positions are strong.

{ 0 comments }

Regardless of one’s level of preparation, the hunt for a hedge fund job can be exasperating at times. Setbacks and rejections are inevitable, as is the case for most on the job quest, and setbacks and rejections are certainly not exclusive to those seeking a career in the hedge fund industry.

Improvements in unemployment rates do not translate into the hedge fund industry, which is, and will continue to be, a highly competitive arena. In short, it has always been a challenge to break into the industry and the broad improvement in the overall job market has had little to no effect on one’s prospects in the hedge fund industry.

Maintaining Your Edge

Job seekers need to guard against the debilitating effects of setback and rejection. While the emotional wear and tear is all too real, allowing it to overwhelm you, only spells disaster for future opportunities. Job seekers of all stripes, but particularly those pursuing ambitions for a hedge fund job, must project an image of unshakable confidence.

Avoid be overwhelmed by recognizing that you have no control over the obstacles you face, while understanding that you have total control over how you react to these obstacles. After all, most of what you are experiencing emotionally is the result of having no control, so let go! Accept it, and work only on that which you can controlyour reaction.

Avoid the Negative Spiral

After weeks of sending out resumes, mining your network and endless interviews, with no success, one’s natural reaction may be to push even harder. While a laudable notion, such persistence can become mindless and unproductive. The experts tell us that we need to disconnect, so that we can restore our energy and recharge our minds.

Establish a job-search routine, carve out time for yourself, and engage in physical activity to avoid the negative spiral.

Seek Feedback from Those You Trust

Having taken the opportunity to step back, restore your energy and recharge your mind, open yourself to the constructive criticism of those you trust. In concert with family members, trusted friends and associates, review your cover letters, resumes, social profiles, and digital footprints.

Make certain your qualifications are clearly and accurately stated, any supporting documentation is error free, and your digital footprint is professional and pleasing to prospective employers.

Consider mock interviews with a mentor to gather a better understanding of how you are coming across to hiring managers because, the longer you have been searching, the greater is one’s tendency to become negative.

Make the Necessary Adjustments

Armed with fresh perspectives and a refreshed mind, one must make the appropriate course corrections as revealed through interaction with family, trusted friends and associates, and mentors. The job-search process can be a humbling one―it can damage one’s confidence and diminish one’s positivism. Be alert to this reality and be constantly on guard with respect to your thoughts.

Ensure that you remain positive and always strive to make course corrections as the need arises. Most of all, recognize that this situation will not go on forever―you will land that hedge fund job!

{ Comments on this entry are closed }

You Want a Mid Level Job in the Hedge Fund Industry

August 6, 2018

This may not be the time. While it is true that hedge fund starts are outpacing closures, the fact is, new hedge fund firms are not likely to be in the market for hedge fund professionals in the middle stages of their careers. Why? Because the majority of startups are firms seeded by established funds, […]

Read the full article →

Does an MBA Provide a Fast Track to a Hedge Fund Job?

March 19, 2018

Let’s begin by saying that no one should be discouraged from pursuing an MBA. However, it is important that one is clear on the motive for doing so. If the motive is to fast track employment with a hedge fund, one might be in for disappointment. Some Harsh Facts According to the 2018 Hedge Fund […]

Read the full article →

What Do You Think About the S&P 500 as a Benchmark Now?

February 19, 2018

The January 2018 results for aggregate hedge fund performance have been published. According to HFR, the industry showed a 2.8 percent gain. In contrast, the S&P 500 gained 5.7 percent in January before plummeting in the wake of February’s correction. Year-to-date gains for the S&P 500 as of February 16 stood at 2.19 percent, 61 […]

Read the full article →

How Bright Is the Future for Hedge Fund Jobs?

December 11, 2017

As 2017 marches to its close, thoughts inevitably turn to the promise and challenge of the New Year. The hedge fund industry is on track to achieve its most successful year since 2013 in terms of gains and assets under management. Year-to-date gains, by most reports are 7.5 percent and assets under management have reached […]

Read the full article →

Can You Write Your Way into a Hedge Fund Job?

October 16, 2017

People of diverse backgrounds have found a home in the hedge fund industry – lawyers, computer scientists, investment bankers and public accountants, to cite a few. According to the 2017 Hedge Fund Compensation Report, the previous professional backgrounds of about 14 percent of hedge fund professionals are lumped into an amorphous category termed “other”, which […]

Read the full article →
Real Time Web Analytics