What Is a Hedge Fund Manager?

A hedge fund manager is the person who makes the major investment decisions for the hedge fund.

What a hedge fund manager does

So, what does a hedge fund manager do?

Hedge fund managers monitor the stock market and choose which assets to buy.

It’s about much more than simply choosing assets likely to rise in value over time, though. Hedge fund managers use several investment techniques to make money, including:

Short-selling: When you borrow assets (eg. shares), sell them, buy them back at a lower price and then return them
Leverage: Using borrowed money to make investments
Hedging: Where you invest in a way that offers protection from potential losses caused by other investments not moving in the direction you expected

Hedge fund managers need to make decisions fast and communicate them with their team – the analysts who do the research and the traders who make the actual trades.

The working day of a hedge fund manager

If you want to be a hedge fund manager, expect your typical working day to be something like the one below.

First priority: Assessing your fund’s position

You begin your day before the markets open, so you can review your fund’s current position. The London Stock Exchange opens at 8am, but you might be investing across different global markets.

You’ll likely then talk to your analyst colleagues about trade possibilities and reach out to others to find out more.

Next step: Watching the market

When the markets open, you watch the action to see if it affects your fund. Your traders let you know when opportunities come up and get your advice on how and when to trade. Then it’s usually a working lunch, split between meetings and checking the market.

Rest of the day: Monitoring your funds while on the phone

After lunch, you check your stock positions yet again. You’ll likely make sales calls to people who might invest in your fund. You’ll probably take calls from people who want you to invest in their stock, too.

All the time, trading is going on in the background, and your team is keeping you informed.

Wrapping things up:

Once the markets close, it’s likely you’ll have a final meeting to go over the day’s trading and plan for tomorrow. Then it’s time to unwind. However, global markets are still open, so you’ll usually still need to keep an eye on them.

What kind of person enjoys hedge fund management?

Considering a career in hedge fund management? You’ll need to be prepared for the tricky work-life balance (or lack of it). It’s a rewarding career for those who suit it, though.

You’ll be more likely to enjoy hedge fund management if:

You get a buzz from risk

Hedge fund management can be highly stressful. If you find the danger thrilling (rather than scary), you might consider the trade-off worth it.

You’re fascinated by finance

In hedge fund management, you live and breathe the stock market. To monitor every movement and investigate every company takes enthusiasm. If you love reading business news for fun, you may have what it takes.

You’re confident in your abilities

With every investment you make, there’ll always be an element of risk – no matter how well considered your investment decision is. That’s just how hedge funds work. Good hedge fund managers are confident and don’t second-guess themselves. Once you decide, you need to move forward without hesitation.

You’re competitive

Hedge fund investors often choose where to invest because of the skill of the manager. If you want people to invest with you, you don’t just have to beat the market – you’ve got to beat the other fund managers out there, too. A competitive streak will help you grow your client portfolio.

You’re OK with early mornings (and late nights)

The London Stock Exchange starts trading at 8am, so you need to be awake early for business. And that’s just the start. Each exchange operates at its own local time zone. For example, the Tokyo Stock Exchange opens from 12am to 6am GMT. You need to be willing to work the hours that match your investments.

Skills and qualities of a good hedge fund manager

To thrive as a hedge fund manager, you need the following skills:

Decision-making
Organisation
Communication skills
Critical thinking
Analytical skills
Multitasking
Numeracy

How do you become a hedge fund manager?

If you want to become a hedge fund manager, it’s important to get as much experience as possible. Look out for finance internships and related work experience placements. Anything that gets you more familiar with the stock market is worthwhile.

Although all transferable experience is valuable, it’s best to avoid back-office roles in hedge management firms (except for short internships). It’s easy to think a good way of getting in the door is to work in IT or another support role for a hedge fund company. However, while they’re great jobs in themselves, they’re not a route to becoming a fund manager. You’d be better off gaining experience in other investing roles.

It's also valuable to make contacts. Network at career events and try to make connections with current hedge fund managers. Perhaps some alumni from your university went into the sector. If so, you could reach out to them via LinkedIn.

Hedge fund management salaries and perks

Two major attractions of being a hedge fund manager are the money and the lifestyle.

Salaries and bonuses can be six-figures. Plus, fund managers typically have a share in their own fund – so if their fund performs well, there’s no limit to their income.

Because hedge fund clients are very wealthy, you’ll also make connections with the rich and famous. Expect to receive invitations to occasions where you’ll enjoy all the luxuries of other people’s wealth.

However, remember that connections and money depend on your fund’s success and can disappear as fast as they come. You also need to balance the appeal of having a high salary and potentially influential connections with a tricky work-life balance.

If you’re particularly driven by money, you could consider a career in the US. Stateside hedge fund managers tend to earn higher salaries than their UK counterparts.

Career options after working in hedge fund management

Working in hedge fund management doesn’t have to be forever.

Some hedge fund managers will use their experience and connections to move into other finance careers, such as:

As hedge fund managers typically earn large amounts of money, some plan to retire early (occasionally in their 40s). If you’ve earned enough to have a comfortable retirement, you could travel, write a book, volunteer or be a stay-at-home parent – the choice is yours. There’s a lot of hard work for you to do before you get to that stage, though.