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If you take a look at the most successful people on Wall Street, you'll quickly notice that a lot of them are hedge fund managers. They are the ones who create amazing private funds entirely composed of high quality stock market picks, individual commodities, and other investment vehicles—all with the sole purpose of maximizing profits for their elite clientele.
Hedge fund managers are wealthy. Incredibly wealthy. They have earned respect, and they made it in one of the hardest industries to deal with at a personal and professional level. It's easy to see why a lot of people want to become one of these highly paid people.
That doesn't make it easy though. If you want to become a hedge fund manager, it's a lot more work than you'd expect it to be. Here's what you need to know if you want to go down this awesome career track—and why you might want to think twice if you're unsure.
Why do people want to become a hedge fund manager, anyway?
Aside from the respect, the biggest reason why people want to have this job is the paycheck. Even among other fund management positions, people who end up working "in the hedge" category get paid exorbitant amounts of money. You need a lot of money to invest in hedge funds, so it only makes sense that the people managing them would be paid well.
Before you even think of quitting your job, understand that you need a significant amount of education to become a hedge fund manager.
Just like any other career in finance, you will need to show that you are intelligent and knowledgeable. No firm will hire you if you don't have a degree, and if you really want to have a shot at managing one of these funds, you'll need a degree from a top university.
A degree from Wharton Business School can help tremendously, as can any Ivy League degree. You also should aim for a Master's degree, as well as a prestigious internship at a firm that offers ETFs, mutual funds, or similar investments.
Finance, economics, as well as quantitative degrees tend to work best when you're hitting the books.
Once you've gotten adequate education, you'll need to become a student of Wall Street.
Hedging your bets on Wall Street requires a wide range of knowledge on the ways that all major investment vehicles work. If you're not able to handle analyzing funds, predict markets accurately, or do due diligence, you're likely not cut out to manage a high risk, high volume fund.
While you're working to understand the market, it's a good idea to keep tabs on your progress for clients at a current fund job. People who are looking for a new hedge fund manager want to see a track record that proves you can bring in some serious cash.
If you couldn't already tell, you will need to really beef up your resume.
You are not the only one who wants to become a hedge fund manager—not by a long shot. This is one of the most competitive job markets in the world, and if you want to actually get a job with this title, you have to show you're the perfect person for the job.
Many people who do end up finding a position as a manager for one of the biggest hedge funds in the world tend to get their jobs through networking rather than regular applications. I'd strongly suggest getting a job as a fund analyst or an ETF manager before you go the hedge fund route.
Certification is also basically mandatory at this point.
Just about every hedge fund worker will have a CFA, CAIA, or similar certification on top of their high end business degree. The certification will help you establish credibility with clients, as well as show the SEC that you know what you're talking about.
The Securities Exchange Commission can still weigh in on your qualifications. Should something go wrong with your fund management, your certification can help shield you from extra problems.
Start applying to hedge funds and networking once you're ready to get the job.
Firms will laugh you out the door if you do not have the right qualifications, so you should only apply to become a hedge fund manager when you really show your mettle on paper. I'm not joking. They're absolutely brutal, and might even blacklist clients they don't feel are serious.
Once you feel you have qualifications similar to other managers, start applying and networking. You need to prove that you're hungry for success, and that you have a track record to match that appetite.
It's worth pointing out that even qualified people may not love working as a manager in a fund.
This is not an easy job. The pay matches the difficulty and your fund's performance. If you can't take the heat, get out of the kitchen.
If you lose money, your clients will be furious, and so will everyone around you. It's not hard to lose your job and also get financially wrecked as a hedge fund manager.
In most cases, hedge funds will put your soft skills to the test before they hire you.
Your soft skills matter just as much as your quantitative skills do. After all, it is a management position. Since you are going to be managing people and guiding them towards a better fund, you have to have soft skills that will help you work with others.
Don't be shocked if part of the hiring process involves seeing how you interact with others, what you would do if you saw an employee behave incorrectly, training potential clients on how to invest in a hedge fund, or how you would go about your day to day job responsibilities. Hedge funds are known to test applicants this way, and for good reason.
Don't be shocked if you get rejected a lot.
If you're horrified to find out that every application you got was denied by recruiters, don't be. It's incredibly hard to find a job managing funds at all—especially if you're new to the world of hedge funds.
If you keep trying, you might be able to succeed, though.
Nothing is guaranteed in life, but that doesn't mean you shouldn't try to become a hedge fund manager if that's what you decide you want to do. You will not always be able to find the place for it, but if you keep showing serious effort, someone will notice and will want to hire you.
Heck, even if managing hedge funds don't work out for you, you'll still end up with a stellar track record worthy of a great salary. That's not too bad.