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

Hedge Fund Managers are probably one of the most 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 dollar 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 earns 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 category.

  1. Professional Skills
  2. Personnel Skills

Professional Skills

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

Knowledge of Markets

A hedge fund manager need to be the expert of the existing marketplace, competitor development and regulation 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 competitor’s offering, and how they differ from your offerings. Identifying your offering’s advantages and disadvantages is the fundamental requirement of a hedge fund manger.

Knowledge on Financial Instruments

Deep understanding of different investment vehicle is the fundamental knowledge of a hedge fund manager. Managing and trading with millions of dollar of client’s 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 reducing 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 holds MBA, MFin, PhD and comes from a variety of industry and experience level.

Meaning, a graduate in biological science may be a good fit if the hedge fund is dealing in bio-technology or 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 course can help to skyrocket your chances in 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 complex idea in simple terms is an essential skill for this position.

Frequent meetings with high-net-worth individuals in five-star settings requires 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 towards 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 provide 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 hundred of thousands, to millions of dollars.

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

Job Description Example

Hedge Fund Manager Job Description

Established financial investment firm is seeking to fill an open hedge fund manager position in California, United States to manage the portfolio of a new fund launch.

Our client is looking to bring on board an Experienced Portfolio Manager to manage a Fund of Hedge Funds; invested across markets and all hedge fund strategies globally.

The ideal candidate will have a master’s degree in a relevant field with previous experience in management. Certifications in RIA, CPA and CFA or a willingness to work toward them during employment is expected.

In this position, the candidate can expect to work closely with high-value clients. Strong communication and financial skills are crucial. Inside sales skills are also beneficial, as the job will include adding additional investors to the fund.

Key Requirements:

  • Must have a strong financial background and must take a good fundamental bottom-up or top-down approach to investments
  • Must be a team player
  • Must have experience/track record in for global funds
  • RIA, CPA and CFA will be advantages
  • Currently based in California, United States

Your next step?

Learn how increase your chances in getting a high paying job without a degree

We’ve One Question…

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

Let us know in the comments below!

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