Undergrad student Question about HF?

Im about to finish undergrad in CS. I was always interested in stocks and trading and do trading too. I want to build my career in hedge fund field as portfolio manager and eventually start my own fund. I have intermediate level of knowledge about finance and can read income statement, balance sheet and cashflow statement. Im also gonna switch my major to finance in Masters degree. Can someone help me to understand the career path to HF. What kind of skills should i accquire in order to success in this field? Can someone guide me to self learn concepts for Hedge Funds? Your help will be appreciated. Thank you

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To break into the hedge fund (HF) industry and eventually become a portfolio manager, here's a roadmap based on the most helpful WSO content:

1. Career Path to Hedge Funds

  • "Paying Your Dues": Most hedge fund jobs are not entry-level. Typically, candidates spend 2-3 years in investment banking, equity research, or sales and trading. These roles build the technical and analytical skills required for hedge funds.
  • Specialization Matters: Your choice of prior experience will shape the type of hedge fund you can join:
    • Global Macro Funds: A background as a strategist or economist at an investment bank or asset manager is ideal.
    • Event-Driven/Long-Short Funds: Investment banking or equity research experience is highly relevant.
    • Systematic/Quant Funds: Your CS background is a huge asset here. Programming and data analysis skills are critical.
    • Credit Funds: Experience in distressed credit sales & trading or leveraged finance is valuable.

2. Skills to Acquire

  • Technical Skills:
    • Financial Analysis: Deepen your understanding of financial statements (income statement, balance sheet, cash flow). Learn valuation techniques like DCF, comparable company analysis, and precedent transactions.
    • Programming: For quant roles, proficiency in Python, R, or MATLAB is essential. SQL and data visualization tools are also helpful.
    • Market Knowledge: Stay updated on market trends, macroeconomics, and sector-specific developments.
  • Soft Skills:
    • Networking: Hedge funds are a small, tight-knit industry. Networking is crucial to land interviews and opportunities.
    • Creativity: Hedge funds value unique perspectives and the ability to think outside the box.
    • Communication: You’ll need to articulate investment ideas clearly and persuasively.

3. Self-Learning Resources

  • Reading:
    • Financial news sources like WSJ, FT, and The Atlantic to stay informed about markets.
    • Investment pitches on platforms like VIC or Seeking Alpha to understand how professionals analyze opportunities.
  • Courses:
    • Take online courses in financial modeling, valuation, and programming (e.g., Python for finance).
    • WSO’s financial modeling resources and templates can be a great starting point.
  • Practice:
    • Build your own investment theses and backtest strategies.
    • Practice brainteasers and case studies, as these are common in HF interviews.

4. Networking and Internships

  • Networking: Start reaching out to alumni, attending finance events, and joining investment clubs. Hedge fund hiring is often discreet, and referrals play a big role.
  • Internships: Aim for internships in investment banking, equity research, or trading desks. These will give you the foundational skills and credibility to transition into hedge funds.

5. Long-Term Vision

  • Portfolio Manager Goal: To become a portfolio manager, you’ll need years of experience as an analyst, building a track record of successful investments.
  • Starting Your Own Fund: This requires not only investment expertise but also the ability to raise capital and manage investor relationships. Focus on building a strong network and reputation in the industry.

By combining your CS background with finance expertise, you can position yourself uniquely for quant or systematic hedge funds. Keep learning, networking, and gaining relevant experience, and you’ll be on the right track!

Sources: Hedge Fund Careers: Getting a Hedge Fund Job Out of Undergrad and Beyond, https://www.wallstreetoasis.com/forum/hedge-fund/the-hedge-fund-experience-good-bad-ugly?customgpt=1, Hedge Fund Careers: Getting a Hedge Fund Job Out of Undergrad and Beyond, Q&A: Non-Target School to Portfolio Manager at a Top Hedge Fund – 6 Years Out of Undergrad

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Relax on trying to move all the way to PM. It's good to have ambition, it's another to set yourself on a 15+ year path when you don't know what you're doing. 

CS is probably fine, better for some areas of HF. Quant skills are valued not just in quant funds, but also in L/S and other areas of traditional finance. I would say the masters really isn't necessary if you can get a role that leads to hedge funds down the line. Many can join HF out of UG, but many more will not be able to. So, IB, ER, S&T, AM, etc. can all lead to HF down the line. Figure out what kind of fund you want to join or what area you're most interested in first. 

 
Most Helpful

First, get better at coding. It's a skill that will carry over into basically any career nowadays. Even if you don't need it, it's better to have it. Second, masters in finance is really only needed if you can't land a job out of UG. It's not going to teach you something you couldn't already learn. MFE would be better suited for actually learning things, but that's a more quantitative degree. Doing L/S, you probably won't break in from UG, look at IB or ER roles and network. There's tons of guides out there.

As an aside, your questions strike me as really straightforward and easily googleable. This is a basic thing I would expect out of any analyst, to be able to look up things on the internet and read them instead of instantly asking broad questions like "How do hedge fund analysts research and create thesis's". That's something a simple google search will tell you. You have to be able to do independent research on these topics instead of trying to crowdsource basic questions like this. 

 

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