Why do people do this?

Based on the most helpful WSO content, the roles of a hedge fund trader and a hedge fund manager are distinct and have not converged over time. Here are the key differences:

Hedge Fund Trader:

• Focus: Primarily involved in executing trades and managing the trading book.
• Responsibilities:
  • Implementing trading strategies.
  • Monitoring market conditions.
  • Executing buy and sell orders.
  • Managing short-term positions.
• Risk: Faces immediate consequences for trading mistakes, such as getting fired.

Hedge Fund Manager (Portfolio Manager):

• Focus: Overseeing the entire portfolio and making high-level investment decisions.
• Responsibilities:
  • Setting the overall investment strategy.
  • Allocating capital across different assets.
  • Managing client relationships.
  • Answering to clients and dealing with potential withdrawals if performance is poor.
• Risk: Faces broader consequences for mistakes, including client dissatisfaction and potential fund withdrawals.

Key Points:

• Role Distinction: The roles are fundamentally different in terms of responsibilities and the scope of work.
• Consequences of Mistakes: Traders deal with immediate job security issues, while managers face client-related repercussions.
• Work Nature: Traders focus on short-term market movements, whereas managers focus on long-term strategy and client management.

For more detailed insights, you can refer to the WSO thread titled "Hedge Fund: Research Analyst vs. Portfolio Manager" which discusses the responsibilities and risks associated with these roles.

Sources: AM vs HF: The Business of Our Business, Q&A: ex-bank trader now running crypto hedge fund. questions?, https://www.wallstreetoasis.com/forum/hedge-fund/the-hedge-fund-experience-good-bad-ugly?customgpt=1, Hedge Fund: Research Analyst vs. Portfolio Manager, https://www.wallstreetoasis.com/forum/hedge-fund/how-to-adjust-to-hedge-fund-culture?customgpt=1