Hedge funds are investment funds that use a variety of strategies to make money. These strategies include long-short, global macro, event-driven, and systematic trading. Hedge funds can be found in almost any industry, including real estate and energy.
Hedge fund entry level jobs are often entry level positions in finance and accounting. Hedge fund entry level jobs are usually filled by recent college graduates who have just finished their studies or people who have been laid off from other companies and are looking for alternative employment.
Hedge fund entry level jobs typically require candidates to have an undergraduate degree or higher in business or a related field such as economics or finance. Some firms may also require candidates to have experience with Excel spreadsheets, PowerPoint presentations, database management systems (like Access), and SQL programming languages (such as MySQL).
Hedge Funds Entry Level Jobs
Investment Professionals
These professionals define the investment strategy by coming up with research-based models and trading strategies, and performing portfolio management tasks. Hedge funds are highly leveraged. This allows money managers, traders, and quants to try a lot of risky trades and strategies.
Entry-level investment professionals start as modelers or researchers with a quant role. Such entry-level hires begin by learning existing trading strategies. Past the entry-level stage, investment professionals begin exploring and developing trading models through research and data mining with the goal of benefitting from profitable arbitrage and trade opportunities. More experience leads to roles in idea generation and may allow the candidate to become a portfolio manager at a senior level.
Traders
Traders execute the defined strategies following the fund’s investment plan and the overall direction of investment professionals. Entry-level traders usually execute trades for investment professionals. After gaining some experience, traders can suggest modifications to strategy. Entry-level traders for hedge funds start with trading plain-vanilla equity, bond, or futures and gradually move on to complex trades like option combinations, high-frequency trading, arbitrage trading, or automated model based trading.
Risk Management Professionals
Risk managers act as monitors to set limits and oversee any deviations in trading limits that can lead to risk. Hedge funds are high-risk, high-return investments. It is important to keep risk measures in place that are duly followed by various professionals managing the hedge fund. Risk managers perform two main functions:
- They define the boundaries for investment and trade exposure; and
- They actively monitor the developments to ensure that those boundaries are not breached.
An entry-level position in risk management may be titled risk analyst. They are involved in quantitative calculations (like VaR), DCF analysis, and assessment of risk exposure. After sufficient experience, the role expands further into senior positions, which involve defining the risk limits and framework of trading and investing. Risk managers have to collaborate with multiple participants to seek their buy-in. It includes traders and investment professionals who need to be convinced about the risk limits without posing challenges to meeting the hedge fund investment goals. Acting as a liaison with legal and regulatory staff also forms an integral part of risk management.
Marketing
These employees are responsible for managing investor relations, client services, and fundraising activities. Even well-established fund houses and reputable portfolio managers need effective marketing for their investment ventures to succeed. Most hedge funds target HNWI investors, and the marketing team is dedicated to managing these investor relations and offering client services to ensure adequate fundraising. Entry-level candidates in hedge fund marketing should have good communication and presentation skills and advanced financial knowledge, as they must act as the face of the hedge fund to clients. Initial responsibilities involve simple note-taking during client meetings, conducting client interviews to assess their needs, offering investment solutions, and acting as the point of contact for HNWI clients. Gradually, the role broadens into fundraising and associated functions like syndication.
Accounting
The accounting department owns all the critical accounting-related tasks, which include calculating NAV and maintaining books and records for holdings, investors, and figures. Most of the tasks are aided by dedicated computer programs and accounting software. Monitoring and error-checking is an integral part of this job.
Trade Support
This segment builds all of the trading and analytic systems used by the other parts of the hedge fund. Here, IT professionals will build out the trading systems and software platforms that are needed and customized to each particular trading strategy and even to each individual trader. Support staff members are on-call when systems break or don’t behave as expected.
The Bottom Line
Working at a hedge fund can be very lucrative as salaries are high and the associated perks can also be considerable. But to qualify for a job in this competitive industry requires multifaceted skills, knowledge, and the right temperament. Doing the job well is not sufficient; one needs to improve and progress continuously. Life in a hedge fund involves long working hours, intensive travel, consistent pressure to perform and meet the targets, and excellent communication skills. These requirements often lead to high attrition, including switching to a completely different industry after several years.
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