How To Get Into Hedge Funds | Hedge Fund Career, How To Get A Job

With government restrictions and high buy-in fees, hedge funds are out of reach for most ordinary investors. But that might not be such a bad thing. Hedge funds are significantly riskier than the majority of other investments.

However, Hedge funds employ some of the highest-paid business professionals anywhere, but breaking into the industry is no easy task.

Building a hedge fund career requires perseverance, networking stamina, and a fierce competitive spirit. This article is a must-read if you want to know how to get into hedge funds. 

What Do Hedge Funds Jobs Involve

A hedge fund is a type of investment fund that raises capital from institutional and accredited investors and then invests it in liquid and publicly traded financial assets.

Most hedge funds seek absolute returns rather than relative returns and employ a wide range of strategies and securities to accomplish this.

“Absolute returns” mean that if the S& P is down 25% for the year and your hedge fund is down 15%, that’s still a bad outcome because the fund has lost money. On the other hand, if the S& P is up 30% for the year, but your hedge fund is only up 20%, that’s still a good result because the fund has earned money.

 “Wide range of strategies and securities” implies that hedge funds do far more than buy and sell stocks and bonds. They may, for example, short-sell securities, use derivatives, bet on mergers succeeding or failing, and become directly involved in events such as spin-offs and restructurings.

Hedge funds differ from mutual funds and asset management firms in that they seek relative returns (e.g., “beat the S& P by 5%”) and employ more traditional strategies such as buying and holding undervalued stocks.

Private equity firms differ from hedge funds in that they typically buy and sell entire companies or large stakes in companies, and most of their holdings are illiquid.

See Also: Citi Personal Wealth Management Review | 2022

Which People Work At Hedge Funds

Hedge funds jobs are ideal if you are extremely passionate about the public markets and prefer to follow companies and other securities rather than work on deals.

The phrase “extremely passionate” means:

  • You’re always reading about the financial markets in books and other forms of media.
  • You research companies in your spare time, write investment theses and buy and sell stocks, bonds, derivatives, and other assets.
  • You’ve joined investment clubs and competed in investment competitions.
  • You put off other tasks/responsibilities by trading your portfolio.

Money is also a big source of motivation for most people. 

  • Even as a junior-level employee such as a Hedge Fund Analyst, you can earn into the mid-six figures, up to $1 million+, if you work for the right fund and perform well.
  • Individual Portfolio Managers can earn hundreds of millions or billions per year.

Hedge funds jobs provide a much higher pay ceiling than investment banking, as well as (occasionally) better hours and work/life balance and the opportunity to do more interesting work.

The disadvantages are that your exit options from a hedge fund job will be more limited, it will still be very stressful despite working fewer hours, and if your fund blows up or otherwise shuts down, you will be out of a job.

Furthermore, many people are pessimistic about the future of the hedge fund industry due to the rise of index funds, passive and automated investing, and artificial intelligence (AI).

See Also: How to Invest in Hedge Fund in 2022 | Sure Things You Must know

Types of Hedge Funds Jobs

There are two types of hedge fund jobs available: first, you can work in the front office, which is what most people want to do, and second, you can work in the back office.

We will go over the front office in depth because it is the most appealing path in a hedge fund. In the front office, you typically have three options:

#1. Traders

These individuals are also known as Execution Traders (ET). In a typical hedge fund, there are two types of ET. First, some traders generate and implement new ideas. Second, some traders only act on the advice of others.

#2. Investment Analysts (IA)

These people work tirelessly to conduct research, generate new ideas, and assist top-level managers in making sound decisions.

There are two levels of investment analysts: junior analysts and senior analysts. These financial analysts are also known as Research Analysts.

READ ALSO: What is an Investment Portfolio? | Overview, How it Works, and How to Build One

#3. Portfolio Managers

These are the highest-ranking employees. They decide on where to invest and what to buy/sell. Portfolio managers question the research analysts about their findings.

And, if there is any cause for concern, the research analysts are invited to revisit the report to make an informed recommendation. The portfolio managers then make the final decision and instruct the traders to buy/sell everything at the appropriate price.

So, let’s take a quick look at the back office.

People are required in the back office to support the primary function. Because the hedge fund’s main draw is the “front office,” people in the back office don’t get much attention.

These are system support technicians, administrative ninjas who keep things tidy and care for minor details, and CFOs. They are in charge of the organization’s entire finance function.

If you want to work in the front office of a hedge fund, you can start as a junior analyst/trader in a small/large hedge fund and work your way up.

Check out!: How Do Hedge Funds Make Money

Which Skills Do I Need To Get a Hedge Funds Job?

If you want to get a hedge funds job, you should have an excellent academic record, and if you want to be an analyst or a portfolio manager, you should not be afraid of hard work.

“The game has become much more difficult,” says Colin Lancaster. He classifies the best hedge fund employees as “exceptional decision makers” who spend hours researching the markets.

Mielle believes that hedge fund analysts must be confident in their investment ideas and be willing to defend them when other analysts or portfolio managers question their validity.

While most hedge fund jobs prefer people with mathematical and data skills, these alone are insufficient. “A common misconception about the hedge fund profession is that you must be either a math whiz or a sleazy dealmaker to succeed.

We believe that being a successful portfolio manager or analyst also requires the ability to communicate complex investment ideas, innovative thinking, the generation of new ideas, and flashes of intuition that can connect the dots.

This could be why Citadel seeks candidates with sound judgment, good communication skills, and a “whatever it takes attitude,” or why Two Sigma seeks “creative” and “intellectually curious minds.”

Although not all hedge fund jobs require a specialist degree discipline, applicants for quantitative positions must have a degree in a quantitative-related field.

While DE Shaw is known for hiring quantitative PhDs and coding talent, it also hires ‘generalist interns’ with degrees in fields such as social studies.

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How To Get Into Hedge Funds

There are “on-cycle” and “off-cycle” paths into hedge funds, similar to private equity recruiting. The difference is that “off-cycle recruiting” is far more common in hedge funds due to the industry’s fragmentation and less standardized required skill sets.

Mega-funds such as Citadel, Point72, Millennium, Fortress, and Bridgewater contact 1st Year IB Analysts like large PE firms do during the on-cycle hedge fund jobs recruiting process.

These funds have internal recruiting teams or are represented by specific headhunters, such as Glocap, and they aim to fill a certain number of openings in the coming year.

This process is getting earlier and earlier each year, and it now occurs several months into the job for New York-based Analysts. That means you must begin preparing before your full-time job begins.

“Preparation” for hedge fund interviews entails developing 2-3 solid investment pitches, honing your pitches to sound like deals, taking a strong position on each one, and ensuring you can explain your market views coherently.

You can certainly network with professionals at these large funds. Still, headhunters dominate the process, and opportunities are frequently dependent on factors beyond your immediate control, such as your bank, undergraduate institution, and GPA.

Mega-fund interviews typically last 3-4 rounds, with several individual interviews in each round and a modeling test or investment pitch near the end. If accepted, you will be notified promptly, and your start date will usually be after your first year in IB.

Mid-sized and smaller funds, on the other hand, use off-cycle recruiting because they don’t have good visibility into their hiring needs until someone leaves. These departures are most common in the first quarter of the calendar year because bonuses are distributed then, but positions open up throughout the year.

These funds almost always want recruits to start immediately, but depending on the timing, they may allow Analysts to stay until they receive their annual bonus (e.g., 2-3 months might be OK, but probably not 9 months). With these funds, networking is far more important and one of the most effective ways to land interviews.

You can certainly contact headhunters and apply online through resume drops and job boards, but networking will yield better results if done correctly.

Because these companies do not have dedicated HR departments, it is easier to find professionals on LinkedIn or through your alumni network, email them to introduce yourself, and set up brief phone calls.

Once you’ve landed an interview, the process may not be all that different, especially if someone has recently left and they need a replacement right away. However, if they do not have an immediate hiring need, the process could be much longer (e.g., several months rather than days or weeks). 

You should see: 20 Best-Paid Hedge Fund Managers In 2022

What Are The Salaries of Hedge Funds Jobs?

Hedge funds jobs are among the highest paying in the financial services industry. In London, juniors in analyst/research roles can easily earn £200k ($270k) in salary and bonus. In New York, the pay is comparable.

The amount you earn in a hedge funds jobs is determined by factors such as the role you play, the size of the fund you work for (its “assets under management”), and the fund’s performance – or the performance of your unit within the fund.

Because most hedge funds skew heavily toward bonuses rather than salaries, the pay can vary greatly by role.

In hedge funds, partners are paid the most: they receive a percentage of the fund’s profits each year. Funds do not reveal how much their partners are paid globally. 

Read also: How to Invest in Hedge Fund in 2022 | Sure Things You Must know


The hedge funds jobs are not for the faint of heart. If you want to make money in a hedge fund and are willing to take risks, you have the perfect combination to become a hedge fund manager.

However, the road is not always smooth and sunny. To become the best in the industry, you must be consistent and keep pushing yourself. We hope this article will be a perfect guide to getting into hedge funds. 

Frequently Asked Questions

How do you invest in hedge funds?

Individuals who want to invest in hedge funds must be institutional investors, such as pension funds or accredited investors. Accredited investors have at least $1 million in net worth, excluding the value of their primary residence, or individual annual incomes of more than $200,000 ($300,000 if married)

Is it difficult to get into hedge funds?

Less than 1% of the population is likely to compete at the elite level in any competitive field. In the highly competitive world of finance, such as hedge funds or private equity, less than 1% of students make it into one of the top ten firms.

Is working in a hedge fund a good career?

Many people are drawn to a career in hedge funds because of the money: even junior-level employees can earn $500K to $1 million, and senior-level Portfolio Managers can earn much more.

Do hedge funds hire straight out of college?

Previously, hedge funds could only hire people who had completed bank sales and trading graduate programs. However, they are increasingly training university graduates themselves. 

Is a hedge funds job stressful?

Working at a hedge fund is demanding. You are putting billions of dollars at risk. Something unexpected happens every day. When there’s no news, it’s difficult to figure out why you’re losing millions on a stock.



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