Top Skills You’ll Need to be a Hedge Fund Manager

Hedge Fund Managers are probably one of the highest-paying careers in the financial industry. Highly competitive, you’ll need to be among the best and brightest to be even considered for the position.

Managing billions of dollars,

“A hedge fund manager need to be able to balance risk and return, to develop a sound investment process, and understand his or her edge,”

Says Ricky, a former hedge fund manager.

Life as a hedge fund manager is not easy, but earning millions of dollars annually is not unheard of. Chris Hohn and James Simons earn 1.8 billion to 1.6 billion respectively. The top 25 hedge fund managers earn on average $808 million each.

Here are some essential skills you need to have to become a hedge fund manager. These skills are divided into two basic categories.

1. Professional Skills
2. Personnel Skills

Professional Skills

Professional skills are skills gained through education, training, and experience.

Knowledge of Markets

A hedge fund manager needs to be an expert in the existing marketplace, competitor development, and regulatory restrictions.

Managing billions of dollars, there are things you can and cannot do.

You need to understand the current and future market trends, which allows you to develop competitive products to be offered to your clients.

With in-depth knowledge of the market, you will have the capability to understand competitors’ offerings, and how they differ from your offerings. Identifying your offering’s advantages and disadvantages is the fundamental requirement of a hedge fund manager.

Knowledge of Financial Instruments

A deep understanding of different investment vehicles is the fundamental knowledge of a hedge fund manager. Managing and trading with millions of dollars of client money, each trade is performed on complex products often a combination of different strategies. 

A suitable candidate must be familiarized with financial products and derivatives including; options, futures, commodities, interest rate swaps, and forward contracts.

You should have a clear understanding of financial products and markets, dependencies, and factors driving prices and performance.

Your job, is to “Balance the risk and reward.”

You are expected to maximize the return potential and reduce the risk exposure in each of your trades.

Education

Bachelor’s degree preferably in accounting, finance, economics, or business administration is the minimum requirement for a candidate to be considered for the position.

Often hedge fund managers hold MBA, MFin, and Ph.D. and come from a variety of industries and experience levels.

Meaning, a graduate in biological science may be a good fit if the hedge fund is dealing in the biotechnology or the pharmaceutical industry.

Credentials such as Chartered Financial Analyst (CFA) or Certified Public Accountant (CPA) can be advantages when being considered for the position.

Although getting a CFA is never easy, getting yourself educated with some of the best CFA courses can help to skyrocket your chances of getting your certifications.

Personal Skills

Personal skills are learnable skills that can be developed through attending courses available online or reading self-help books.

Communication Skills

The ability to pitch a complex idea in simple terms is an essential skill for this position.

Frequent meetings with high-net-worth individuals in five-star settings require social etiquette, confidence as well as the ability to convince clients to entrust their money to your hedge fund.

The ability to ‘sell’ even when you are not part of the sales team is still essential. You may need to pitch the complex idea to your team to get a ‘buy-in’ to get the idea executed.

Hedge fund looks for candidates with exceptional skills in communication and presentation.

Taking up a public speaking course might help you on improving your presentation and communication skills.

Team Oriented

Candidates will work with a dedicated team driven toward a common goal. A typical hedge fund management team includes three main areas:

1. Investment Team – Research/ Investment analysts and portfolio managers who create investment ideas and make investment decisions.
2. Trading Team – Traders who execute the investment team’s strategies and aim for the best return for each trade.
3. Support Team – Compliance, accountant, operations, and IT where it provides all necessary support for Investment and Trading Team.

You will have to be willing to put the team’s interest before your own, committed to the common goal, and be willing to contribute.

Risk Tolerance

An ideal candidate should have the emotional ability to tolerate risk. You’ll need to maintain a sound mind when executing trading strategies that have a 50% loss potential for a 200% return.

High-risk trades are common and failures are not tolerated as each trade can cause hundreds of thousands, to millions of dollars.

The ability to show proven success in trades when facing risk makes an attractive candidate for a hedge fund manager.

Job Description Example

Your next step?

Learn how to increase your chances of getting a high-paying job without a degree. 

We’ve One Question…

Did we miss out on any critical skills needed to become a hedge fund manager?

Let us know in the comments below!

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