Hedge Fund Managers
Education and Training Requirements
You’ll need to earn stellar grades in high school in order to be accepted to a top-tier college—the starting point for the majority of hedge fund managers. In high school, take classes in economics, business, finance, accounting, statistics, computer science, English, speech, psychology, foreign language, and social studies.
Hedge fund managers often have a master’s degree or even a Ph.D. in finance, mathematics, economics, financial engineering, quantitative finance, programming, marketing, or business administration. Others have advanced degrees in a specialty such as engineering or accounting.
According to an eFinancialCareers.com analysis of its curriculum vita database, the following U.S. colleges are the most popular for hedge fund professionals: Columbia University, New York University, University of Pennsylvania, Cornell University, University of California, Harvard University, University of Chicago, Carnegie Mellon University, University of Michigan, Princeton University, and Yale University.
Hedge fund managers, especially those at small firms that don’t have a large support staff, might choose to earn certificates in compliance, investor relations, and risk management to diversify their skill sets. These certificates are offered by colleges and universities and professional associations. For example, Seneca College offers a certificate in investor relations. The University of California-Irvine and the Institute of Risk Management provide certificates in risk management. And the University of South Florida offers undergraduate and graduate certificates in compliance.
The Chartered Alternative Investment Analyst Association offers the Fundamentals of Alternative Investments Certificate Program. In this online, self-paced course, you’ll learn about traditional vs. alternative investments, hedge funds, investment returns and risks, due diligence, risk management, and other topics. Visit https://caia.org/programs/fundamentals for more information.
Other Education or Training
Many associations provide professional development opportunities to hedge fund professionals that focus on investment strategies, accounting and auditing practices, compliance and regulatory issues, risk management practices, and U.S. and international financial markets. These organizations include the New York Alternative Investment Roundtable, CFA Institute, International Association for Quantitative Finance, Investments and Wealth Institute, and CFA Society New York.
Certification, Licensing, and Special Requirements
Certification or Licensing
As they climb the career ladder, many hedge fund managers earn professional certifications, which allow them to keep their knowledge up to date—and learn new skills. Some of the most popular certifications in the hedge fund industry include:
- The Chartered Financial Analyst program, which is administered by the CFA Institute, has three levels of examinations and measures the candidate’s ability to apply the fundamental knowledge of investment principles at the professional level. This is also a useful advanced course, primarily for research analysts and similar positions. See https://www.cfainstitute.org/en/programs/cfa.
- Series 7, Series 63, and Series 65: For junior trading positions, hedge funds will typically immediately sponsor an employee for the Series 7 and 63 exams. The Financial Industry Regulatory Authority Series 7 General Securities Representative exam is the main qualification for stockbrokers, and is normally taken in conjunction with the Series 63 Uniform State Law Exam. See https://www.finra.org. Hedge fund managers may also need to take and pass the Series 65 exam, called the Uniform Investment Adviser Law Examination, which covers portfolio management strategies, ethics, laws, and fiduciary responsibilities. See https://www.nasaa.org/exams/study-guides/series-65-study-guide.
- The Chartered Alternate Investment Analyst designation is administered by the Chartered Alternate Investment Analyst Association. It’s geared those who manage, analyze, distribute, or regulate alternative investments. See https://caia.org/programs/the-caia-charter.
- The Chartered Investment Counselor designation, which is offered by the Investment Adviser Association, tests applicants’ proficiency in investment counseling and portfolio management. See https://www.investmentadviser.org/resources/professional-designations/cic-designation.
Other certifications are provided by the
- Association for Financial Professionals (certified treasury professional, certified corporate financial planning and analysis professional)
- Certified Financial Planner Board of Standards (certified financial planner)
- Hedge Fund Group (certified hedge fund professional)
- Investments & Wealth Institute (certified investment management analyst)
- CMT Association (chartered market technician)
Some hedge fund managers are licensed as certified public accountants. The Uniform CPA Examination, which is administered by the American Institute of Certified Public Accountants, is used by all states.
Experience, Skills, and Personality Traits
At least 10 years of investment experience and a proven performance record are required to become a hedge fund manager.
Hedge fund managers need excellent investment, analytical, and stock-picking skills in order to effectively manage their fund and generate strong returns for investors and general partners. They also should be cool under pressure because they must make split-second trading decisions. Strong communication skills are important because hedge fund managers need to effectively explain their firm’s trading strategies to current and potential investors, as well as interact with coworkers. Advanced knowledge of the financial markets, extensive experience in portfolio management, and asset allocation expertise is also extremely important. Other key traits include creativity and imagination, strong organizational skills, attentiveness to detail, confidence, and leadership ability.