10 Steps to a Career in Hedge Funds

Hedge funds employ some of the best-paid business professionals anywhere, but landing your first job in the industry is no cakewalk. Building a hedge fund career takes determination, networking stamina, and a fierce competitive streak. Here are some steps to help get you to that interview and then land that job.

Whether you are looking for an entry-level position or a mid-career shift to a job as a hedge fund manager, this 10-step plan will help you off to a strong start.

1. Make Sure This is What You Want

The more certain you are that you really want to work in hedge funds rather than mutual funds, ETFs, or private equity, the easier it will be to navigate these steps and land a 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 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.

2. Study the Hedge Fund Industry

If working for a hedge fund is your goal, create daily habits that work toward that goal. Subscribe to some free hedge fund newsletters, read books or articles on hedge funds every day, and join a local hedge fund association or club.

You’ll learn the basics – all the main terms and definitions, who the major players are, what differentiates the companies, and what strategies managers use.

3. Use the Three-Circles Strategy

Jim Collins published a best-selling book in 2001 called Good to Great. In his research, he found that the companies that make the leap from being good to becoming truly great employ what he called the “Hedgehog Concept.”

When facing a tough decision or a turning point in the business, leaders of these companies would draw three circles. One included options they were passionate about, one showed options that took advantage of their experience, and one included only ideas which could be highly profitable. They would then consider only options that fell within the intersection of these three circles.

To be successful in the hedge fund industry and make wise decisions along the way, consider only positions in which you can be passionate about your work, that draw upon your education and natural strengths, and that have the potential to be highly profitable.

4. Identify Hedge Fund Career Mentors

Early on in your exploration of the world of hedge funds, try to identify a couple of potential mentors with whom you could begin to develop a relationship. It takes time to develop mentoring relationships, but many successful people are happy to help others out if they can.

To impress a mentor, you will need to show commitment, patience, humility, and a hunger for learning.

5. Get an Internship

Once you have become more knowledgeable about hedge funds and have identified a potential mentor, start looking for an internship.

Even if you are working full-time in another position, conducting research for a hedge fund for 5-10 hours a week can expose you to some of the ways that a hedge fund creates trading ideas and operates as a business.

Work on-site if possible, but don’t pass up a great learning opportunity if the only way to get the internship is by working remotely.

Even better, get several internships. The wider your experience the better qualified you’ll be.

6. Develop Your Unique Value Proposition

Now that you have read articles, books, and newsletters on hedge funds, completed a few internships, and developed mentoring relationships, it’s time to figure out where you fit into the industry. Define a niche and hone in on that area. 

For example, if you want to be an emerging markets analyst, write a few white papers on emerging markets and focus your job search on companies that specialize in related funds.

7. Polish Your Credentials

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. How much money did you personally bring in for the firm you worked for previously?
• Education. An Ivy League degree, an MBA, or a quant-focused Ph.D. are all highly valued.
• Something extra. Media savvy, asset-gathering ability, or an information advantage are all bonuses.
• CFA, CAIA or Chartered Hedge Fund Associate (CHA) designations look good on a resume.
• High-quality references from your past few jobs, especially if they’re in finance, help.
• A stomach for a high commission and bonus compensation structure is a prerequisite for the job.

8. Seek Out Unadvertised Opportunities

One way of finding unadvertised job openings is by cold calling companies and firms in the Chamber of Commerce listings, industry directories, or associations.

In the hedge fund industry, this can be done by networking through the Hedge Fund Group (HFG), Hedge Fund Association (HFA), or your local CFA society.

Informational interviews can be a great way to find job leads or even land a position.

The same approach that works in any job search can apply to hedge funds. Try to set up informational meetings 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 businesses. Use the meeting as a way to learn about the work they do and the challenges of the industry.

When the meeting ends, ask for the names of two or three additional individuals who might be able to meet with you. Then watch your network grow.

9. Consider Hedge Fund Service Providers

A service provider job may seem less glorious than working directly for a hedge fund, but there are great career opportunities there.

These positions also 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. 

10. Apply for Hedge Fund Jobs

If you have worked through the previous nine steps, you now have a rough idea of what type of hedge fund strategy or service provider group you may want to work for.

Few recruiters will work with someone who has less than three years of experience working directly within the hedge fund industry. Many professionals use experience in other industries to segue into the world of hedge funds, but they usually don’t get there through recruiters. Your best bets are:

• The informational interview method mentioned above
• A connection with a hedge fund professional who graduated from your school
• Membership in the Hedge Fund Group (HFG)
• Earning your CFA, CAIA or CHA designation
• Connecting with professionals at hedge fund conferences

The Bottom Line: Stay Hungry

Most hedge funds want people 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.