AllAboutFinanceCareers Finance jobs, courses & advice. All good. All in one place.

Hedge Funds

Working for a hedge fund could potentially land you with an incredible salary. Hedge fund managers at the top of their game can pocket millions in a very short space of time, making this area one of the most attractive if you have a penchant for the finer things in life and crave the buzz of the City.

But hang on there! A hedge fund career is by no means for everyone. Yes, there’s the potential for fast cars and fancy holidays, but that comes from working in one of the most notoriously risky areas of the financial world…

Let’s not beat around the bush…what’s a hedge fund?

What are hedge funds? And what do they do? Well, a hedge fund is a private investment fund; a type of alternative investment. Hedge funds don’t tend to be the average investor’s cup of tea. It’s a way of making capital that’s reserved for extremely wealthy (High Net Worth Individuals) and experienced investors, or institutional investors – so expect exclusive clients in this field!

Hedge funds are designed to make money regardless of whether a market is up (i.e. people are buying) or down (selling). Hedge funds have the potential to give a higher than average rate of return (the profit you get back from the money you put in); however the investment strategies used are known to be particularly risky ones…Investors could lose extortionate amounts of money as easily as making it. The pressure really is on for hedge fund professionals to get things right!

Oh, and in case you were wondering, the term ‘hedge fund’ comes from the verb ‘to hedge’, which stems from back when farmers used to uses hedges to secure and limit the size of a piece of land. Over time, this term evolved in meaning to apply to the sense of limiting risks in investments. Good, eh?

Jobs in hedge funds  

Some individuals really do thrive in an adrenaline-pumping environment. If you think you’re one of them, then there are a number of roles you could take on within a hedge fund. Graduates can move into a hedge fund analyst role. In some cases this is an actuarial role; other hedge fund analysts carry out further research into potential investments for the fund. The analysts assist the hedge fund managers in managing portfolios.

Hedge funds are usually an option after you’ve gained some experience working in areas such as options pricing in investment banking. Junior traders can cross over into hedge funds from investment banking – particularly if they’ve been trading with the bank’s own money (called proprietary trading) which has similarities in strategies to the ones used in hedge funds.

Hedge fund managers

A hedge fund manager is the decision maker on hedge fund portfolios. These guys need to have blood pressure levels of steel! They also get involved in researching and analysing potential and existing investments for the fund, produce forecasts for asset performance. It’s very much a client-facing role; hedge fund managers regularly meet with their clients to discuss fund progress and new investment opportunities. They may also meet with representatives of some assets that are part of the portfolio/s they manage.

Hedge fund jobs exist with either hedge funds or investment banks. Hedge fund managers will often have built up a few years of experience in an investment bank before moving to focus of hedge funds.

A degree is a must nowadays…

You’ll typically need a related degree to break into hedge funds as a graduate. Masters qualifications can also be beneficial if you plan on become a top hedgie or senior analyst, though it’s your experience and how you prove yourself once you’re on the job that will ultimately determine your career progression.

Professionals working in hedge funds will often work towards the CFA qualification to aid them with career progression once they’ve started to collect a few years’ experience in the industry. Applicants with this qualification will be sought after for hedge funds as it’s one way of demonstrating that employees implement high standards and integrity in what they do – essential due to step up in regulation in recent times!

Recruiters are also on the lookout for ACA or CIMA qualified accountants for some roles in their organisations, and an MBA qualification may also help to shoot you up the career ladder in a hedge fund.