From the category archives:

Hedge Fund Jobs

One sees the adjective happy, in daily use, in many contexts. It may characterize a feeling, causing a sense of satisfaction, a willingness to perform a task, an unexpected pleasure, a greeting, and even a description of slight intoxication.

The connotation most appropriate to describing one’s job in the hedge fund industry encompasses all these, except the last two.

Happiness Is a Universal Goal

Happiness is important, so much so, that it appears in the Declaration of Independence as one of three principal inalienable rights. After all, who doesn’t want to be happy in their chosen profession, their life and their relationships?

Unfortunately, happiness is a subjective term and, more to the point, the definition of happiness varies from one person to another, much like the idiom “one man’s trash is another man’s treasure”.

Fortunately, the 2018 Hedge Fund Compensation Report has real insights into the illusive state of happiness, and what factors are most likely to engender it, at least among hedge fund professionals.

What the Report Reveals 

As stated earlier, the concept of happiness has multiple contexts. Happiness, in terms of a feeling, is addressed in the report by asking participants how they view their work/life balance.

As we see in the chart below, 80 percent of hedge fund professionals view their feelings regarding work/life balance as average to excellent, while just one in five regard their experience as below average to poor.

This result suggests a generally positive sentiment with regard to the influence of work on familial and other interpersonal relationships.

Job Security

It is impossible to imagine that one could be happy in a job that may end at any moment. The 2018 Hedge Fund Compensation Report has polled its participants in this regard with the following results.

As the chart demonstrates, less than 10 percent of hedge professionals express serious concerns with regard to job security. While one must concede that this is not a measure of happiness, it must also be agreed that job insecurity is not a source of happiness, but rather, an impediment to said happiness.


This brings us to the “holy grail” of happiness—money! Revealed in the chart below is the fact that less than one-half, in fact, just 4 in 10 hedge fund professionals are satisfied with the level of total compensation they receive. But honestly, would you expect any other result from hedge fund professionals?

To most in the industry, satisfaction is synonymous with complacency. For this reason, we see the above result. No hedge fund investor wants to bet his financial future on a complacent firm. Investors want firms that strive to achieve the highest possible gains within the risk model to which they have agreed.

It follows that those hedge fund professionals exhibiting the will to achieve the best possible gains for their investors will also want the highest possible compensation for their efforts.

Final Thoughts

In the 2018 Hedge Fund Compensation Report there are additional charts clearly showing that the level of compensation satisfaction rises in direct proportion to the level of overall compensation, proving once again that cash is king.

However, the level of happiness one achieves as a hedge fund professional depends on how much weight one places on work/life balance, job security and, of course, compensation.


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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 $3.25 trillion, a record high. Although hedge fund closures have outpaced new starts in 2017, many view this as a positive…market forces at work, weeding out the non-performers and strengthening the overall industry.

How Do These Metrics Affect Jobs?

Hedge funds suffered a significant series of redemptions, beginning with the September 2014 CalPERS announcement of its withdrawal from hedge funds. In 2016, the industry bled more cash than in any year following the financial crisis.

Unquestionably, a strong finish in 2017 will enhance job prospects. Many of the investors that fled hedge funds may re-think their positions with regard to hedge fund investment. Obviously, top-performing hedge funds will receive the lion’s share of investment from those returning to the hedge fund fold. As a result, we are unlikely to see hedge fund starts outpacing closures in the New Year.

That said, significant gains in AUM, almost certainly, would increase the number of job opportunities in the industry.

Passive vs. Active Investing

As many are aware, passive investment has been promoted by the likes of Warren Buffet and others of his ilk. Passive investment also received favorable treatment by many in the financial media.

As a result, passively managed AUM has grown from 12 percent in 2010 to 18 percent in 2016, according to the McKinsey Global Asset Management Report. Interestingly, despite this 50 percent jump in AUM, revenues remained constant throughout this period at 3 percent.

Consequently, any rational person has reason to question the viability of continued growth in this sector. Naturally, if AUM growth in passive investment does decline, hedge funds should position themselves to acquire the lion’s share of the reinvestment that will necessarily occur.

A Paradigm Shift in Portfolio Construction

The bull run, having celebrated its ninth birthday, is causing many investors to contemplate what happens when it ends. Hedge fund managers are no exception. As a result, we are beginning to see a transition of focus— a focus toward risk and performance drivers and away from asset classes. Just as retooling for a new model creates job opportunities in the auto industry, job opportunities will arise in the hedge fund industry as it “retools” for portfolio construction favoring risk and performance drivers.

Final Thoughts

Greater employment opportunities in the coming year are almost a certainty in the hedge fund industry. The level of human capital required by active investment is greater than what is required for passive investment.

Investor faith in hedge funds has been, to some extent, restored. Assets under management are likely to grow as a result. That, in combination with widespread concerns regarding the bull run’s end, is certain to drive investors in the direction of hedge funds as their interest in preserving capital is going to exceed their contempt for the hedge fund fee structure and diminish their interest for out-sized returns.

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Hedge Funds Are Not Immune from Fake News

November 13, 2017

The current buzzword, fake news, begs the question, how often does one encounter fake news? It must occur with some degree of frequency, because pollsters report that two-thirds of the American public believes the mass media peddles fake news. There are larger questions. Is fake news the result of carelessness or is it done intentionally? […]

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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 […]

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Investor Confidence in Hedge Funds Continues to Soar

September 18, 2017

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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Are You a Woman Struggling to Snare a Job in Hedge Funds?

August 21, 2017

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 […]

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What Career Paths Lead to a Job in the Hedge Fund Industry?

July 10, 2017

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 […]

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