A career in the hedge fund industry is one of the most desirable careers in finance.
Money is undoubtedly the greatest attraction to careers with hedge funds, with analysts making $150k and then some. Portfolio managers often make north of seven figures, which is why eventually running a fund is considered the optimal career trajectory for so many.
Hedge Fund Lifestyle and Wages
The job rests significantly on individual performance, a simultaneously appealing and frightening facet of hedge funds.
Hedge fund employees work an average of 50-70 hours a week, far less than their investment banking peers.
However, everybody wants to be a rock star portfolio manager, but not everybody is equipped with the knowledge to get a hedge fund job in the first place.
Getting into Hedge Funds Out of College
Most hedge fund jobs are obtained once you've "paid your dues." Paying your dues typically involves two years of investment banking, equity research, or sales and trading. Among those, what you choose to pursue will shape what type of fund you seek to pursue.
- For example, if you want to join a global macro discretionary fund, you may be better off being a strategist or economist at an investment bank / big asset manager.
- The investment banking route prepares you for event driven and long/short as does equity research.
- If you want to be in a systematic hedge fund / CTA fund, you'll need to do some kind of programming research.
- If you want to work for a credit fund, it may make sense to work for a distressed credit S&T desk or in a leverage finance group.
That being said, getting a start in investment banking will typically leave most doors open to pursuing a career in a hedge fund after graduation.
how to become a hedge fund analyst without experience?
While working in equity research or in investment banking is typically the clearest path to working at a hedge fund, it is not impossible to start working at a hedge fund right after undergrad. It will however, take a great deal of work to overcome to highly competitive nature of recruiting.
Just like in investment banking, internships are absolutely critical in getting a hedge fund job. You can start searching for internships as soon as the summer after freshman year.
Steps to finding a HF position without experience:
- Prepare to answer questions about why you want to work in the industry and learn how to answer industry technical questions by using the Wall Street Oasis Hedge Fund Interview Guide.
- Familiarize yourself with the process with this detailed post on WSO
- After going through the above two steps, NETWORKING IS KEY. You will not get a position at a hedge fund by simply dropping your resume. There will likely not even be a public resume drop for you to use. There are two methods of networking to get a hedge fund internship:
- Connections of family and friends - this is probably the path of least resistance; however, most don't have these connections that they can utilize
- Cold calling and cold emailing - search alumni databases, corporate websites, and linkedins for phone numbers and emails. Emailing is typically considered to be more courteous in the modern era and it allows you to more easily understand who is willing to help you / speak with you. When calling, you may have to play phone tag before someone will ultimately tell you that they can't help. Read more about the
The Cold Email Template and Attachments
The most critical aspect of your cold email will be the stock pitch you attach. You need to prove that you're a capable investor if you want a chance at the internship. They're considering including you on their team for three months, and you likely have little experience to demonstrate that you'd be a good choice over the other candidates. The stock pitch is what separates you - on initial contact - from the myriad of hungry students competing for a position. A quality stock pitch puts you miles ahead of your peers, and it will greatly increase the responses your email gets. The length of your stock pitch should be between five and eight pages.
If you have a strong resume that demonstrates investing or finance experience - feel free to attach that as well when emailing.
Preparing your email template is a simple task. You should include:
- Year in School - If Applicable
- Your inquiry ("I would love to hear about your career and your experience at X fund. Would it be possible to arrange a short phone call to discuss your background and where you're at today?")
- Make sure to include your stock pitch and resume (optional but recommended) and mention it somewhere in your email. You can say something along the lines of, ""I apologize if this is too forward, but I've attached my resume and a stock pitch for your consideration."
While not all professionals will read this detailed stock pitch, if your stock pitch is clear, coherent, and well-researched, then the professional will respect your initiative and see your value as a potential intern.
A final rule of thumb is to not email more than one person at a given fund at a time. If you are blasting out emails that will be noticed and looked poorly upon.
Recruiting for Hedge Funds Jobs after Investment Banking
Above we have reviewed how to break into the hedge world bypassing the traditional paths to HFs that we discussed earlier - IE investment banking, equity research, and quantitative roles. Now we will review the process for getting into HFs coming out of an IB or ER role.
So how do you get your foot in the door once you've "paid your dues?"
User @WallStreetPlayboys shared details on how that recruiting process works:
The best way to land a hedge fund interview is through networking, but... a large portion of the recruiting process is outsourced to headhunters, who primarily target bankers and research analysts in their searches (management consultants are also successful).
The job responsibilities are not exactly the same, but the skill set and intelligence necessary to be a junior banker serve as a baseline for the kind of work that is expected of hedge fund personnel.
Preparing For Your Hedge Fund Interview Experience
Fortunately, hedge fund internship interviews aren't incredibly technical. Besides some basic questions on the markets and investing, the interview will consist of behavioral and fit questions. Come prepared with a few short stories you can adapt to answer some of the more typical behavioral questions. If you are coming out of investment banking, you should be prepared to talk about the deals that you have listed on your resume.
Learn how to answer behavioral interview questions with the FREE Finance Interview Guide.
Hedge Fund Interview Stock Pitch Preparation
The hedge fund interview is a nerve-inducing affair. For many, this is the position they've yearned for as early as high school. Combined with the fact that hedge fund recruiting is incredibly competitive, the average fund only hires five to six analysts a year, and it can seem like an overwhelming hurdle to jump.
First, understand that you'll likely never jump that hurdle unless you use some sort of hedge fund interview course. Most candidates will use some sort of guide to prep for the technical aspect of the interview, so those who don't will get left in the dust.
One particularly critical moment in the interview is the stock pitch. Here's how you need to prepare for the stock pitch:
Here are a few rules of thumb for the stock pitch recommended by users @WallStreetPlayboys:
- Tailor at least one of your ideas to the fund's strategy. (e.g., If it's a L/S shop, have a pair trade ready to go.
- The second idea, that can be anything. It could be based on a recent deal you worked or something going on in your coverage area, or something you read in Barron's/a research report last weekend.
- When presenting the idea, you want to walk them through the process and explain your decision making at each step:
- Inspiration / how you came up with the idea
- Model the company (details are better but errors can ruin your chances - a balance)
- Conduct background research about the company
- Refining the original thesis based on research and model
- Coming up with a valuation for the company
- Making an investment recommendation based on that valuation (buy / sell)
- Listing any possible downsides / risks, along with any mitigating factors
If you utilize the WSO Hedge Fund Interview Course and take heed of the stock pitch advice above, you'll be in good shape.
Learn more about the stock pitch in the video below.
Talking About Your Personal Portfolio in the Interview
Start a personal trading account as early as possible. This will give you skin in the game and really make you follow the markets. It will also incentivize you to learn about different strategies that you can then talk about in interviews.
Being able to explain concepts such as asset rotation strategies, closed end fund logics, etc. can be very impressive. One users suggested opening a trading account with $1k and beginning to invest it with your own ideas - if you lose money - then you can simply write it off on your taxes and consider it part of your education.
Being a Great Hedge Fund Intern
Let's then assume that you've gotten the position. At this point, your success is on your performance as an intern. When they say, "Jump," you say, "How high?" Find some way to add value to the fund. You need to make yourself as essential to the fund as possible. Ideally, you get a return offer for an internship next summer (or a full-time position if you're a junior). If the fund is indeed hiring analysts, that's your green light. Hopefully, conversations about whether the fund can/will hire you come up organically. Otherwise, you should bring that point to light.
Assess whether the firm will hire you upon graduation. If not, it's time to look for other opportunities. It's an unfortunate scenario, but you have good experience under your belt and hopefully a solid referral. If all goes well, then you'll have landed yourself a full-time hedge fund job out of undergrad.
Ready to Start Preparing For Hedge Fund Interviews?
Want access to 20+ more sample pitches with actual templates? The WallStreetOasis Hedge Fund Interview Prep Course has more than enough sample pitches as well as 814 questions across 165 hedge funds. Crowdsourced from over 450,000 members and trusted by over 1,000 aspiring hedge fund professionals just like you, the WSO Hedge Fund Interview Prep Course has everything you'll ever need to land the most coveted jobs on the buyside.