Hedge Fund Portfolio Manager Skills

Last time we looked at who typically becomes a hedge fund portfolio manager and how much they earn. Today, we’ll take a look at the specific skills required.

Given the diversity of the hedge fund industry, a portfolio manager’s skills and investment orientation will differ greatly. Some portfolio managers may seek broad exposure to the markets while others will focus on a specific and narrow investment strategy. Some managers will have a bias toward non-directional “absolute return” strategies, while others will have exposure to market moves.

Starting with a more junior position, a quick scan of hedge fund jobs at JobSearchDigest.com reveals a hedge fund in the New York area looking for an associate portfolio manager. This professional, while not managing a portfolio on his own, would implement investment decisions, monitor equity, currency (including hedged positions), stock index futures and cash positions in the hedge fund firm’s accounts, and liaise with senior members of the firm’s investment team.

Another New York-based hedge fund needed a portfolio manager with specific experience in financial services, industrials or transportation. This professional would not only follow one of these industries closely, but would likely invest in it himself. A top business school grad with three or more years of experience as an analyst and proven track record in investing could qualify for this upwardly mobile position.

If you are looking to create earnings like George Soros (see the Investment Strategies section in this blog), you might seek out a global macro hedge fund. You would need direct experience in interest-rate and foreign exchange trading, developing trading strategies based on both both macroeconomic and quantitative strategies and econometric models. A successful candidate for this position would most likely already be working for global macro portfolio manager or trader with a proven track record.

And finally, there are portfolio manager positions in more technically focused areas such as high tech and quantitatively-oriented hedge funds. A senior quant portfolio manager, for example, would likely have a Ph.D. in a mathematical or a quantitative discipline and five or more years of experience in the field. These firms develop cutting-edge algorithmic and statistical arbitrage trading models, and apply them to equity, index and futures trading.

Becoming a portfolio manager is the reason many professionals work for hedge funds or launch their own. As a passionate investor, chances are you have followed certain markets for years, developed your own personal investment style and now want to demonstrate your investment expertise in a larger playing field, earning millions for your clients as well as yourself.


Vault Career Guide to Hedge Funds    www.vault.com

Alternative Investment Management Association (AIMA)   www.aima.org

Alpha Magazine   www.iimagazine.com

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