Hedge funds are mentioned hundreds of times daily in the media and employ some of the most well-paid business professionals anywhere. It is not a cakewalk to land your first hedge fund job, because building a hedge fund career takes a lot of determination and networking stamina. Many hedge funds get up to 100 inquiries a week from students and experienced professionals searching for employment opportunities.
How do you get noticed, swing an interview and land a hedge fund job? Whether you are looking for an entry-level position or a mid-career shift to work as a hedge fund manager, this 10-step plan will help you get off to a strong start.
Step 1. Be Sure You Really Want to Work for a Hedge Fund
The more sure you are about working for a hedge fund and not being an accountant or working at a mutual fund, ETF or private equity fund, the easier it will be to navigate these 10 steps and land your first hedge fund job.
If you really want to work for a hedge fund, it will show in your self-discipline, networking, knowledge of the industry, passion and, ultimately, your actions. You can change your mind later, but if you want to try to work in this industry go all in and learn as much as you can. Make the decision to change focus, commit to it for three to five years and see what comes of it.
Step 2. Become a Student of the Hedge Fund Industry
If working for a hedge fund is your goal, then create daily habits that work toward that goal. Examples are subscribing to free hedge fund newsletters, reading two to three chapters in a book on hedge funds each day or joining a local hedge fund association or club. To get a feel for where you might fit within the industry you need to learn the basics:
- Who are the major players in the industry?
- What terms/definitions are important to know?
Which strategies hedge fund managers commonly employ?
Step 3. Use the Three-Circles Strategy
Jim Collins wrote a best-selling book in 1995 called "Good To Great." In his research, he found that the companies that made the leap from being good companies to becoming truly great companies employed what he called the "three-circles strategy."
When facing a tough decision or turning point in their businesses, leaders of these corporations would draw three circles. One included options they were passionate about, one included options that took advantage of their experience and one included only those ideas which could be highly profitable. They would then consider only options that fell within the intersection of these three circles. In other words, to be successful in the hedge fund industry and make wise decisions along the way, it might help to consider only positions where you would be passionate about your work, draw off of your education and natural strengths and have the potential to be highly profitable.
Step 4. Identify Hedge Fund Career Mentors
Early on in your exploration within the world of hedge funds, you should try to identify a couple of potential mentors with whom you could begin to develop a relationship. It usually takes some time to develop mentoring relationships, but many successful people are happy to help others out if they have the time to do so. To impress a mentor, you will need to show commitment, a pro-active learning attitude, patience, humility and a hunger for learning as much as you.
Step 5. Complete One or More Internships
Once you have become more knowledgeable about hedge funds and identified a potential mentor, you should start looking for internships. Even if you are working full-time in another position, conducting research for a hedge fund for five to 10 hours a week can be enough to expose you to how that hedge fund creates trading ideas or operates as a business. Try to work on-site if possible, but don't pass up a great learning opportunity if the only way to gain a hedge fund internship is by working remotely.
While you want to learn as much as possible during these internships, put yourself in the hedge fund employer's shoes - they are very busy and working hard in a competitive environment. Pay close attention to details and don't ask too many questions early on, or you will end up monopolizing more of their time than you are worth to them. Try to learn through being within the environment and picking things up as you go. Most hedge fund internships will require you to work on a wide variety of tasks, some which may seem mundane but are of great help to others in the firm.
Step 6. Develop Your Unique Value Proposition
Now that you have read articles, books and newsletters on hedge funds, completed a few internships and are developing mentoring relationships, it is time to figure out where you fit into the industry.
- What type of job would you like?
- What type of responsibilities are you seeking?
This is similar to the three-circles strategy, except now you need to take more definite action toward deciding what role you will fill within the hedge fund industry. For example, if you want to be an emerging markets analyst, write a few white papers on emerging market investment analysis, or specialize your knowledge in one area by really digging in deep, say by interviewing at 10 emerging market funds and reading five well-researched books on the subject.
Don't be generic; be unique and find something you are passionate about. Define a niche and become very knowledgeable in that area compared to the average investment professional. Be careful not to let your knowledge go to your head - coming off as too proud or arrogant can definitely make it hard to get hired or promoted.
Step 7. Hedge Fund Job Tips
Each hedge fund is different, but across the industry there is a set of typical characteristics and skills that many hedge fund employers look for. Here are some of them:
- Quantitative experience and abilities - How much money did you personally bring in to the firm or make for the last firm you worked for?
- Education - Ivy league, MBA, quant-focused Ph.D.
- Signs of being loyal, passionate and humble
- Something extra, such as PR expertise, asset gathering ability or an information advantage
- CFA, CAIA or Chartered Hedge Fund Associate (CHA) designations
- High-quality names from your last few hedge fund jobs or large wire house experience
- A stomach for a high commission/bonus compensation structure
Step 8. Land the Unadvertised Hedge Fund Job
One way of finding unadvertised job openings is by cold-calling companies and firms from online Chamber of Commerce listings, industry directories or associations. In the hedge fund industry this could be done by networking through the Hedge Fund Group (HFG), Hedge Fund Association (HFA), HedgeWorld Service Provider Directory or your local CFA society.
Informational interviews can be a great way to land positions offering great training, experience and pay, and will be more relevant for you than a generic advertising. If you approach a small or fast-growing firm and show a true passion, commitment and confidence in working for them, a position can often be molded around your skill set. As a result, your job has much more potential to be a great fit with your strengths and desires.
A Specialized Approach
Take this approach to searching for a position in the hedge fund industry: Meet with four prime brokerage firms, two administrators, and 20 hedge fund analysts and portfolio managers. Explain who you are, and ask if you can treat them to coffee to learn more about their business. If you learn enough about their business, they will in turn ask what you are looking for and how they might be able to help you achieve your goals. When the meeting ends, ask for the names of two or three additional individuals who might be able to meet with you and watch your network grow.
Step 9. Consider Hedge Fund Service Provider Jobs
While some service provider jobs may seem less glorious than working directly for a hedge fund, there are great career opportunities for someone who is very experienced with prime brokerage, risk management or hedge fund administration. These types of positions expose you to a large number of individual hedge fund managers who might decide to hire you away at some point for your specialized expertise or relationships. Prime brokerage jobs in particular can be a training ground for fund-of-funds marketing jobs and third-party marketing careers.
Step 10. Apply to Hedge Fund Jobs
If you have worked through the previous nine steps, you now hopefully have a rough idea of what type of hedge fund strategy or service provider group you may want to work for. There are very few recruiters who will work with someone who has less than three years of experience working directly within the hedge fund industry. Many professionals successfully use experience from other industries to segue into the world of hedge funds, but recruiters usually will not work with this type of a placement candidate. Your best bets for getting that elusive placement are:
- The informational interview method above
- Connecting with hedge fund professionals who graduated from your school
- Joining the Hedge Fund Group (HFG)
- Earning your CFA, CAIA or CHA designation
- Attending hedge fund conferences to connect with professionals
If you get a chance to apply directly to a hedge fund, make sure you make the short list by following up with a phone call and asking to meet a few days after submitting your resume.
The Bottom Line
Most hedge funds want individuals who are hungry, humble and smart. If you keep this in mind while moving through the 10-step plan above, you should have a great chance of getting your first hedge fund job and beginning a successful hedge fund career.