Working for a hedge fund is one of the most appealing career paths for budding finance types. Hedge funds are much less regulated than other investment vehicles, like mutual funds; in fact, their style and inner workings tend to be a bit opaque. While they may be used to leverage or reduce risk, hedge funds typically use exotic trading strategies to maximize their investment returns. That level of mystery makes working at a hedge fund a seemingly sexier pick over other mundane finance jobs. The fact that hedge funds grab headlines and pay very well doesn't hurt, either.
Not surprisingly, competition for jobs at hedge funds is fierce, and choosing the right bachelor’s degree can be a key first step to landing a choice position. Here are the best bachelor's degrees for positioning yourself for a hedge fund career.
- A bachelor of science (B.S.) degree in finance is ideal for a variety of hedge fund jobs, but your major will matter.
- Bachelor of Science degrees in mathematics, accounting, physics, computer science, and even engineering are also useful, given the recent rise in algorithmic trading.
- A graduate degree such as an MBA or MF can also help in landing a hedge fund job.
Many entry-level openings at asset management firms require degrees in the tree of business majors: finance, economics, or accounting. While a Bachelor of Science in Business Administration is a great well-rounded degree, choosing a school that offers a degree or focus area in finance is preferable. A B.S. in finance can prepare you for a range of hedge fund positions: asset manager, portfolio or equity analyst, and equity trader.
A finance-oriented bachelor's degree can also be a great primer for a Master of Business Administration (MBA).
A Bachelor of Science in Accounting program typically includes a similar core of general business classes, but it has a heavier focus on accounting and tax principles. Students typically take additional courses in accounting basics and corporate accounting principles, as well as economics. Theoretically, this degree plan can also be a good option for fund accountant positions.
Finally, degrees in economics or statistics can be a wonderful fit for certain roles at hedge funds, including macro analysts and risk analysts. These positions involve analyzing risks of all types—economic, portfolio, or even political—and adjusting trading strategies accordingly.
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Other Quant Degrees
The roles of algorithmic traders and quantitative analysts have become increasingly popular in recent years. These positions, which require advanced mastery of mathematics and statistical analysis, are also a fit for other quant majors. This includes Bachelor of Science degrees in mathematics, physics, computer science, and even engineering. While completing one of these programs might be a less conventional route to a hedge fund job, there is something to be said for the rigor and degree of difficulty in completing a mathematics degree at a top university.
Some schools have even developed majors, such as financial engineering majors, specifically for this type of quantitative analysis. At the end of the day, the decision to go with a traditional business or economics degree versus another quant program will depend largely on what type of role you hope to land.
The Bottom Line
While choosing the right degree program is a good first step, where you go to school may be as important. A 2016 eFinancialCareers survey found that the bulk of hedge fund employees attended top schools such as the University of Pennsylvania, New York University, and Columbia University. In addition to receiving a quality education, attending a top school can help you make valuable connections with individuals who have, or will have significant capital.
Remember that hedge funds cater to high-net-worth, accredited investors. If you make enough connections with investors that trust your analysis, starting your own hedge fund may even be an option one day. Until then, getting into a top tier school and majoring in a finance or quant degree is your best starting point.