From the category archives:

Hedge Fund Careers

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.


Because the majority of startups are firms seeded by established funds, senior colleagues are brought over to the new fund and the focus, necessarily, is on junior level hires. This is the reason most newly launched firms are usually on the hunt for experienced, early-career-stage professionals, although there are opportunities for senior level people who have the ability to draw clientele…rainmakers.

Operational hires typically come from the ranks of experienced professionals that have proven their ability to generate revenue and are not overly risk averse. This means senior level people who then hire junior level staff to mentor. Hedge funds are more inclined to hire less expensive junior staff that they can rotate as necessary rather than hiring mid-level staff with specific sector/industry experience.

This staffing philosophy holds true with back and front office staffing. Hires will include senior managers and junior staff, but mid-level staffing is deferred.

Where Are the Best Opportunities?

As stated earlier, opportunities for junior level staff abound, but perhaps the best opportunities in the industry at present are for those with hard-science degrees, which include mathematicians, engineers and developers. Quantitative traders and analysts are in high demand, as are programmers with expertise in MatLab, SQL, Java, Hadoop, Q, kdb+, C#, C++, HTML5, Python and R, and other programming languages such as Julia, whose growth rate is impressive, with hedge funds being foremost among early-adopters.

It is important to recognize the developing interest fundamental hedge fund firms are showing in artificial intelligence, machine learning and big data. A number of funds pursuing a fundamental investment strategy have shown a keen interest in blending quantitative strategies with existing fundamental strategies, which creates an even larger market for the skill sets identified earlier. These blended strategies have been dubbed ‘quantamental’.

As greater numbers of hedge fund firms launch hybrid quantamental funds, there has been a substantial increase in data science hires from academia and from Silicon Valley. Quantamental firms are also showing interest in candidates with artificial intelligence and/or machine learning experience, capable of helping portfolio managers make investment decisions.

Final Thoughts

While mid-level hedge fund professionals may be best served by concentrating their efforts on earning a promotion at their present firm, those at the junior level, those with hard-science degrees and those with programming skills are currently in the best position to find placement in a hedge fund firm.

The hedge fund industry has witnessed extraordinary growth in quantitative strategies and now appears poised to see similar growth in quantamental strategies. The result is that in the current job market, opportunities for employment are peaking for junior level professionals and for those with hard-science skills.

For those with a combination of junior level and quantitative skills, the world is your oyster.


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 Compensation Report, just 4 percent of MBAs enter the hedge fund industry right out of school. That percentage is equivalent to those entering from public accounting and broker/dealer backgrounds. Conversely, 14 percent enter the hedge fund industry from asset management, 12 percent enter from student backgrounds other than an MBA, 11 percent enter the industry from the sell side, and 9 percent enter from investment banking backgrounds.

What Does This Tell Us?

The take-away is this—experience is what matters. The great majority of hedge fund firms are small organizations with few employees, consisting in many instances, of a portfolio manager and a few analysts. This model is replicated in many large hedge fund firms, with multiple portfolio managers and analysts, each responsible for their own portfolios. The common denominator for firms, small and large, is the need to generate positive returns.

Small hedge funds do not have the resources, the time, or the inclination to train those they hire into the firm. Most large firms, because they are comprised of multiple, small groups, have a similar view. Rather, they choose to bring in candidates with a proven record and experience in their given role.

This is not opinion, but is in fact supported by data, as evidenced in the aforementioned 2018 Hedge Fund Compensation Report. The chart below illustrates the responses of hundreds of working hedge fund professionals on the subject of in-house training.



Fifty-six percent of the respondents identify their firm’s training as weak or non-existent, while a paltry 3 percent report an excellent training program. When you consider that the response of “average” mirrors an industry in which training is weak at best and non-existent at worst, then more than 8 of 10 hedge fund professionals must rely on the skills and experience they bring to the job to ensure their success and the success of the firm.

What about Hedge Fund Jobs?

Advanced degrees, such as the MBA, are no guarantee of a hedge fund job offer. Experience is far more important in securing a position in the industry. That, and a proven record of accomplishment in one’s area of expertise, will almost certainly be the greatest factors in securing a position in a hedge fund firm.

This does not mean that an MBA is unhelpful. In fact, the 2018 Hedge Fund Compensation Report makes it clear that MBAs earned about 18 percent more in base pay than non-MBA peers did. More to the point, in terms of total compensation, non-MBAs earned just 75 percent of the total take-home earned by MBAs.

So, while there are many valid reasons to take an MBA, increasing your opportunity to secure a hedge fund job is not among them.

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Prequin reports the hedge fund industry has achieved gains in positive territory for 10 months in a row, with aggregate August gains of 0.97 percent. This is the longest streak of month-to-month gains since the financial crisis, and suggests the hedge fund industry has finally found its feet. Investors Are Taking Notice As has been […]

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