10 Steps To A Career In Hedge Funds
by Richard Wilson (Contact Author | Biography)

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Hedge funds are now 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. (Find out how this U.S.-born
investment innovation became a $1 trillion industry that's both
praised and vilified by the media in our related article, A Brief
History Of The Hedge Fund.)

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 towards 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.

Can't find an internship? Try to connect with young hedge fund
startups or emerging managers who are always seeking help. (Thinking
about changing careers or taking a break from your everyday job? Read
Career Shift: Get Into The Driver's Seat or Rejuvenate Your Life And
Career With A Sabbatical before you decide.)


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 actions towards 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 PhD
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
(Learn more about professional designations in our articles CPA, CFA
Or CFP® - Pick Your Abbreviation Carefully and What Does "CFA" Mean?)

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 a very experienced 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. (Read Fund Of Funds - High Society For The Little Guy and
Private Equity Opens Up For The Little Investor to learn more.)

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'
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.

Conclusion
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. Good luck!

There are many different types of hedge funds out there. To keep
reading on this subject, see Activist Hedge Funds.

by Richard Wilson, (Contact Author | Biography)

In addition to writing for Investopedia, Richard Wilson runs a
popular hedge fund blog and is the founder of the Hedge Fund Group
(HFG). Richard is a hedge fund consultant for a third party marketing
firm and also runs ThirdPartyMarketing.com.

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