First of all, I’ve been a long time lurker…all the way from level 1 to level 3 and once I finished the Charter I started reading the non-exam forums. There’s a lot of great information on this site and I definitely owe a thank you to all the Charterholders who still post in the 1-3 forums because you helped me immensely. As for the reason why I opened up an account…
I’ve begun my search for a hedge fund that fits my personality and my interests. I’m looking for a fund that is primarily short-focused and hedges these shorts with long technology companies. I would prefer the role to be portfolio manager or something along these lines where I have responsibility for client assets and am provided with either a training program or knowledge to better understand the markets and how to invest in them. I would also like to learn how to decide which broker is best for each type of trade. (ex: perhaps Deutsche has lowest commission rates for spot FX trades but for equity swaps you should always trade with MS).
What is the best way to apply to a hedge fund for a portfolio manager role? I am not worried about having to rise up the ranks to portfolio manager as long as my initial work is focused on actual trading/actual research of the market and not some type of derivative of trading like middle/back office operations. I have over four years of experience.
My initial thought is to search hedge fund lists for high AUM or by strategy to choose a type I am interested in–aka “long-short equity” and apply via the website. I’d prefer to try out a smaller shop that is laid back but has several years of experience and proven track record.
I have spoken with recruiters in the past and while they have helped find open positions for me, I really felt like they were working against me. I would rather steer clear of the recruiters and their commission if possible, unless most of you think this is a poor idea.
-I have been looking at Jobline and there really are not many open positions from companies on the site. I am a bit disappointed in how efinancialcareers are the only openings.
-I’ve tried Monster and Indeed, I think Indeed is the more effective of the two. Though it is a bit overwhelming to find a role that is portfolio manager/research/trading that isn’t through a recruiter.
-efinancialcareers has good openings, but I would rather not go through a recruiter if I don’t have to.
This is a cringeworthy post on many levels but I believe you mean well so I will try to provide some constructive feedback:
Please list your credentials so we can better evaluate your chances
There are very few short-biased hedge funds in the country but more importantly, why would you want to do that?
Trying to get into the details of trading before you have even worked at a hedge fund is putting the cart before the horse and adds some doubt that you really know what a career at a hedge fund might be like
Cringeworthy: You are woefully unqualified for a hedge fund PM role. Try to get in as an analyst and work your way up (at least 5-10 years)
Cringeworthy: The supply demand balance between candidates and funds is absurdly lopsided. Intentional or not, your post reads like you have an entitlement complex. You want to find a fund that is a good fit for your personality? Hold on while I try to finish laughing that anyone running a successful would consider your personality fit a top priority.
There are only a few hundred real funds. Yes, there may be 10,000 hedge funds in a broad context, but there are probably fewer than 300 good funds. I would guess it’s even fewer than that. 300 may be a large number in absolute terms, but if you assume that on average these funds have 2-4 analysts total (averaging lots of funds that have 1 analysts against a handful of really big big funds that have many) you can see there are not many seats for the entire industry. Breaking it down by strategy, it is an extremely small world. The competition is brutal. Try to keep things in perspective – it is about adding value to the fund, not what the fund does for you. You will be lucky to even get a job at all even with the CFA Charter.
“I’d prefer to try out a smaller shop that is laid back but has several years of experience and proven track record.”
Homie, ain’t no care about yo preference. This reads absurdly self-centered and egotistical, whether you meant it that way or not.
Source: Professional investor for 9 years, 3/3 CFA, worked in top hedge funds for 6 years
To add to what bromion posted, I would say that HF’s typically look for experienced guys who were weaned doing something else on somebody else’s time and money, eg ER, S&T or M&A and it is seen as something you do after you’ve done the above. (Not saying this is good, but just how it is). Now there are definitely exceptions…as a friend of mine went from doing MO ops to a buyside role at a very good fund. Point is, as bromion said, these roles are competitive.
I assume you want to invest in public equities. One thing you can start doing, (if you haven’t) is learn how to model - BIWS course etc. Maybe start a blog where you can write pitches (not to get a job, but writing up pitches is one way my friend did it). After a while you will gravitate to a sector, and start following funds in this sector, and maybe you will have ideas how to reach out.
Also, if you just like investing, you don’t need to work at a HF, there are many good investors who have regular jobs, and invest their own money on the side. Go to oddballstocks.com for one example. Full disclosure: I have never worked at an HF.
Thanks for the comments…I’ve read a lot of each of your posts over the past couple of months and I know each of you has a lot of talent/knowledge in the field…geo for your oil+gas analysis, bromion through shorting small/mid caps and Palantir you seem to know a lot about any/all industries.
It seems my first post bombed…I guess I should have expected as much from my first online forum!
Palantir, I agree that hedge funds usually want someone who has been taught on another person’s dime–I’ve had a lot of experience on the administration side working on hedge funds mainly. I’ve helped hedge funds construct their order management systems, provided risk reporting of DV01s on IR swaps/swaptions, and recovery rate/spread analysis of CDS. I have a strong product knowledge but I have never actually traded…but this is something I would like to change. Thank you for the BIWS, I think this was recommended in one of…numi’s links I think? I could be wrong about the name but the writeup was useful so this course might be perfect. Has anyone else used it?
I wanted to go the hedge fund route because mutual funds have plenty of restrictions on trading-in some cases, from my understanding, you can’t trade FX forwards which would restrict your hedging abilities…same goes for more complex derivatives–if you can’t trade a forward, you won’t be able to trade a CDS either. And shorting seems out of the question. What if the economy dips 60%? You can only sell at a loss. If there is a large amount of mutual funds without restrictions, then I would be interested.
bromion, here are your answers:
I believe the equity markets are overvalued and will fall significantly in the next year or so. I want a fund that has the experience shorting so they don’t start when it counts most–obviously I would start at a hedge fund that focuses on a different strategy, but long/short net short would fit my view of what the market will do in the next year or two
It’s definitely hard to know what working at a hedge fund would actually be like, there must be an incredible amount of stress involved. But that’s something you have to experience first hand and that’s why I’d like to make the jump.
I agree I am not qualified as a PM–it sounds like I should have worded my original writeup differently. I most likely want a research position at a hedge fund, and learn from a talented PM. It doesn’t have to be directly, but I would like to work my way to PM over the years.
I would disagree with this, but to each their own. If I don’t get along with the culture, I don’t want to work there. And vice versa. I don’t want the company to hire me and realize I don’t match their culture either. I appreciate the tough love though.
Thanks for the feedback…hopefully this post is better received!
Laid back might mean you don’t have to wear a suit every day. That’s about the closest you’ll get.
When you live and die by what markets do day by day, it’s hard to be laid back, given that much of what they do is out of your control and the best you can do is make a sensible risk-adjusted bet.
I had a HF (special situations) interview once and while the dude that was grilling me was not wearing a suit, it was pretty much the opposite of laid-back…
laid back relative to other funds–there is going to be stress from the highs and lows of the market but I’ve worked with people who become unreasonably stressed out over small stressors…I don’t think I could handle that if the stakes were larger.
ilovcfa, do you have any links confirming that? I was under the impression mutual funds were handicapped, but it may just depend on the fund.
Above experience does not qualify you for much, very sorry to say. It would be a stretch trying to get into a basic investment analyst position, never mind HF. Best look for something on the sell side if you’re looking to make it to the HF side one day.
To add to all of this, you seem very confused about how HFs are organized. You say that you’re interested in trading, but you also want to do investment research. Typically investment and operations teams are distinct. The analysts research ideas and present them to the PM; the PM decides whether or not to invest in the idea and then gives the order to the operations/trading team to execute. The research analysts don’t care about prime brokerage relationships or trade plumbing. The traders don’t have discretion to initiate positions based on their views of the economy- they are primarily concerned with order execution.
Also, +1 on the feedback that admin experience won’t do much for you. You should look for a sell-side role and possibly make the transition later.
Also, it’s cute that you say you would consider forgoing large HFs and instead consider “trying out” a smaller shop. HF jobs are extremely competitive- they recruit the best analysts from top investment banks that have themselves recruited from top undergrad schools. In other words, there are several layers of filters in place. There are always exceptions to this, but you should know what you’re up against and adjust your attitude accordingly.
Does anyone have experience/heard of a friend switching from an admin to a hedge fund ops role, to research at a hedge fund? I can find an ops role but I’m not sure how difficult this move would be internally.
I would guess once you’re in an ops role you are labeled as such, and internal transfers are rare.
At this point I am going to choose one or two mid-cap companies I am interested in and do some in depth analysis based on company filings. I can start developing a portfolio from the ground up using a simulation for a month or so and then jump over to real money…then keep track of my P&L from day one.
Once I have a better idea of which industries I really enjoy researching, and have cleaned up my research and investment process, I will work on my sales pitch.
This seems like the best approach vs working on the sell side and then moving to buy side. I can also move to a hedge fund ops role while I start my portfolio.
This is a low probability strategy. You need to research this industry more, ignoring how competitive it is and thinking you can produce work in your spare time with no actual work experience is not going to yield you any results. Time is against you as well, you get older and the kids get younger and smarter, meanwhile you’re not gaining any meaningful work experience. Reassess and reread whats been posted.