Hedge fund analysts research and analyze investment opportunities to recommend strategies to fund managers that minimize risk and maximize returns for investors. Hedge funds pool investments to target high returns across various asset classes using both long and short funds; they are typically used by high net worth individuals who can afford larger and higher-risk investments. Analysts can be hedge fund generalists or can specialize in market sectors, individual companies or opportunities that arise out of situations such as mergers and takeovers.
Hedge fund analysts need to be college graduates with at least one year of fund experience; some funds will hire undergraduates, but this is rare. Some jobs also want you to have experience in a market sector, and some require a specific degree, such as in accounting, economics, statistics or business administration. More experienced analysts may also need a Master of Business Administration or a professional qualification such as the Chartered Financial Analyst or Chartered Alternative Investment Analyst designations.
You need a strong understanding of hedge funds and the investment sector in general. As an analyst, you'll also have skills in quantitative and qualitative research, analysis, financial modeling and due diligence. You'll have the ability to evaluate large amounts of data to formulate investment ideas and write reports. It's your responsibility to convince fund managers to follow your strategies, so good oral and written communication and presentation skills will help.
Depending on the role you hold in the fund, you will research, analyze, model and do due diligence on fund performance and/or opportunities for new investments. Junior analysts often start by supporting senior analysts and spend time doing basic research and learning how the fund works. Over time, you will then move on to making your own decisions and recommendations. The job also involves client reporting, marketing and writing proposals. With experience, hedge fund analysts can advance into portfolio and fund management roles.
Pay and Prospects
According to the Bureau of Labor Statistics the role of financial analyst, which includes hedge fund analysts, had an average salary of $74,350 per year in May 2010. The outlook for the job in the future is good -- projected job growth between 2010 and 2020 is 23 percent, which is above the average 14 percent for all jobs.
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