The average workday for a hedge fund manager begins early and usually runs late. Hedge fund managing is rarely, if ever, a 40-hour-a-week job.
A hedge fund manager is in charge of making investment decisions for a pool of capital commonly provided by investors that meet designated requirements for net worth or investment sophistication. Since a hedge fund manager is responsible for handling a portfolio of investments, his position is somewhat similar to that of a mutual fund or exchange-traded fund (ETF) manager.
However, because hedge funds are typically much higher-risk portfolios that are more actively traded, they require close monitoring and a greater amount of day-to-day hands-on management and decision-making regarding investments. The hedge fund manager is the person ultimately responsible for conducting the hedge fund's everyday affairs, such as raising investment capital and rebalancing investments to maintain a given risk/reward ratio. He is usually supported by a team of analysts and traders who conduct much of the necessary research and are in charge of actual trade execution.
A typical day in the life of a hedge fund manager usually involves constant market monitoring and investment evaluation, along with research and sales work.
Early Morning Reviews and Meetings Before Markets Open
4 a.m. – Roll over and turn on your laptop computer to watch some of the early morning London trading. As it looks like the financial world is not in complete collapse, it's safe to go back to sleep for an hour.
7 a.m. – At work before the opening of the New York markets, you spend the time reviewing the fund's current positions by looking at the previous day's report from your prime broker and considering orders to place for the day. After that, you meet with your staff to consider and discuss new trading opportunities and evaluate existing open positions. You spend the rest of your time poring over financial news from a variety of sources, such as business channels and online news feeds.
Monitoring Markets, Adjusting Trades and Considering Opportunities
8 a.m. – As the U.S. markets begin to open, you watch the action unfold to see if anything happening could significantly impact current holdings or open orders for potential new positions. You may have heard rumors about a possible upcoming merger and make some phone calls to contacts to get more solid facts and additional information. At 9:30, you have an interview scheduled for an analyst position. The interview is interrupted more than once by traders apprising you of arbitrage opportunities or asking if, based on current market action, you want to change price levels on any open orders.
10 a.m. – You continue monitoring market action while reading through the filing papers for a proposed merger by a company in which the fund is heavily invested. Traders continue to pop into your office to run trading opportunities by you. More often than not, you instruct them to use their best judgment, although you might suggest specific parameters under which to make a given trade. You may, perhaps, get a call from a salesperson regarding an initial public offering (IPO) or secondary offering that may interest you.
A Working Lunch
Noon - Lunch is at an upscale restaurant, even if you're not really that hungry, because you're meeting with either a corporate chief executive officer (CEO), a potential investor, or a fellow fund manager from whom you want to get investment ideas or opinions.
Afternoon Sales Work and Reviews
1:30 p.m. – You check all of your market positions immediately upon returning to the office, even though you checked them on your smartphone at least once or twice during lunch. Traders have more questions for you, and you have a scheduled meeting with an equity analyst to discuss taking a position in a tech company.
The afternoon is prime time for making sales calls to potential investors. They typically have questions regarding your investment strategy, risk/return management and the structure of the firm.
News that a company you have a large position in is being investigated by the U.S. Securities and Exchange Commission (SEC) sends the stock tumbling and requires an emergency staff meeting to decide whether to dump the position at a loss or try to weather the storm.
4 p.m. – As the U.S. financial markets close, it's time for an end-of-day meeting to review the status of the fund's portfolio holdings and hear ideas from researchers, analysts or traders regarding potential opportunities for the next trading day.
The day at the office winds down with you reading SEC filings, trade publications, and research reports.
Because it's Friday, you can go two whole days without checking price quotes before markets begin to reopen. However, dinner with a prospective fund investor means the workday isn't done just yet.