Reducing volatility while increasing gains is the hedge fund's goal.
Hedge funds, the somewhat secretive and highly compensated world of many finance professionals, attempt to minimize risk and increase investment returns in all market environments by using a wide variety of investment strategies. Hedge fund manager and analyst salaries make headlines every year, with top managers regularly earning several million dollars -- and sometimes, over a billion. While most hedge fund associates don't earn nearly that much, they still bring home the bacon.
The Range of Salaries
Although hedge fund employees are famously well compensated, the cash only flows when the fund performs. In a profitable year, a fund manager may average well over $3.5 million dollars in annual compensation; traders and junior associates earn less. Junior analysts average $253,710, according to Alpha Magazine. Senior traders average over $1.6 million dollars. Remember that these figures are a range; junior associates may earn as little as $161,369 or as much as $346,051. Traders average anywhere from $1.0 million to $2.2 million in compensation.
Work Environment
As one might expect, these extraordinary paydays come with a cost. The pressure to perform is intense, and so is the competition for jobs. Hedge funds recruit employees from the top business schools and companies in the world, and these employees are accustomed to -- and thrive -- under pressure. Traders, analysts and managers often share one large, open office space. Although there are several extraordinarily successful women in the profession, it's male-dominated. The workweek regularly exceeds 40 hours, especially for analysts and managers.
Educational and Professional Background
Many hedge funds expect their employees to have or pursue advanced degrees from top universities as well as professional certifications. The master's of business administration is almost a given; many employees have doctorates in math or computer science, demonstrating their problem-solving abilities and critical thinking skills. In addition, many employees covet the CFA, an extraordinarily difficult financial analysis exam that many take but few pass. Jobs are often secured through connections, and even associates often already have years of experience.
Essential Qualities of the Hedge Fund Associate
According to Richard Wilson, a hedge fund blogger, several qualities help a candidate land a hedge fund job. In addition to the requisite education, temperament, quantitative ability and experience, something extra must be brought to the table. Money counts. If you are able to bring in money to the fund, or made a significant amount of money for your last firm, it's a major plus. Finally, humility counts. Whence you came, there are many more ready to fill your shoes.
