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A hedge fund manager is a person charged with the responsibility of managing investor’s capital, running the daily affairs of the fund as well as managing ongoing investment decisions regarding the composition of the fund’s portfolio[1].
There is no question that the life of a hedge fund manager can be considered glamorous, however, there is a great deal of risk involved. As the key influencer, hedge fund managers dictate the success or failure of the hedge fund manager meaning should they get the trades right there is a great outcome, however, if they are wrong the consequences could mean losing their job and credibility!
[1] https://investinganswers.com/financial-dictionary/investing/hedge-fund-manager-3514
Hedge fund managers need to ensure they can hold their nerve, back themselves regarding what others may be doing, what the market is doing, what the experts are saying because they need to be right.
There is no doubt that it can be a very rewarding job thanks to the ‘2 and 20’ rule, which essentially means fund managers are paid 2% of the total investment, as well as 20% of the profits. So, putting some numbers behinds that, on a $10 million fundraising that would be $200,000 in fees for just managing the money, not to mention if it manages to achieve $5 million in profits, the manager would receive an additional $1 million in that year!
However, to do such a job, one needs to not only have a steel resolve and sharp analytical skills but usually at least a master’s degree, a financial services licence and experience plus a proven track record including exceptional networking and people skills.
Some of the key attributes identified as making a good hedge fund manager including being technically sound, emotionally stable, good at marketing and decisive decision makers[1].
The general objective of a hedge fund manager is to provide investors with positive returns in most market conditions, protecting them against market volatility. Many hedge fund managers also invest a significant proportion of their own wealth into the funds they manage to provide accountability to other investors effectively showing they have ‘skin in the game’[2].
Hedge fund managers along with their analysts need to complete a wide range of tasks for their investors including data mining, idea generation, due diligence reporting, portfolio management, maintaining financial models for current and prospective companies in the fund, marketing, development of risk and asset class guidelines, proposals, reporting - you name it, a hedge fund manager may need to do it for their investors.
If you think this sounds like a career you would be interested in having a finance or business degree is a great start. From there, a looking into a masters or graduate certificate in finance will put you in the box seat to move into the finance sector.
From there, internships, mentorships, postgraduate study and working as a fund analyst will put you on the way to your career as a hedge fund manager. Did we mention a lot of hard work, luck, networking, late nights and little sleep too?
[1] http://buysidefocus.com/makes-good-hedge-fund-portfolio-manager/
[2] http://www.investors.asn.au/education/other-investments/hedge-funds/
