Getting a Job in Hedge Funds: An Inside Look at How Funds Hire (Glocap Guide) - Softcover

Zoia, Adam; Finkel, Aaron

Softcover

ISBN 10: 047022648X ISBN 13: 9780470226483

Verlag: Wiley, 2008

Inhaltsangabe

Getting a Job in Hedge Funds offers targeted advice for those looking to break into the hedge fund business. With this book, you’ll learn where hedge funds traditionally look for new candidates, what sort of experience is needed to set yourself up for a position, and what can be done to improve your chances of getting into a hedge fund. If you’re seriously considering a career in hedge funds, this book can help you secure a position in this profitable field.

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Über die Autorin bzw. den Autor

Adam Zoia is founder and Managing Partner of Glocap and runs the firm's hedge fund practice. He has been actively recruiting hedge fund and private equity professionals for more than a decade. Zoia is a frequent speaker at conferences and business schools, and has appeared on numerous occasions in mainstream media, including CNN, CNBC and the New York Times, as an expert on hiring trends and hedge fund compensation.

Aaron Finkel is Vice President and Head of Publications at Glocap. He has seventeen years of experience in financial journalism including eleven with Institutional Investor. He is also coauthor of The Glocap Guide to Getting a Job in Private Equity and coordinates the research and production of Glocap's Private Equity and Hedge Fund Compensation Reports.

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The country's leading hedge fund executive search firm offers a rare look at how to navigate the difficult hedge fund hiring path

Landing a job in hedge funds isn't easy. Competition is brutal, standards are high, and the industry is secretive. With Getting a Job in Hedge Funds as your guide, you'll quickly discover what it takes to get a foot in the door whether you're just out of school or have several years' experience.

Written in a straightforward and accessible style, this comprehensive resource offers targeted advice for those looking to break into the hedge fund business. You'll learn where hedge funds traditionally look for new candidates, what sort of experience is needed to set yourself up for a position, and what can be done to improve your chances of getting into a hedge fund.

Getting a Job in Hedge Funds also offers case studies of more than two-dozen people who have successfully navigated the difficult hedge fund hiring path. These people candidly discuss what worked for them, what their interviews were like and what, if anything, they would have done differently. Sample resumes and interviewing tips are also included.

If you're seriously considering a career in hedge funds, it helps to understand how they hire. With Getting a Job in Hedge Funds, you'll gain an edge that will allow you to stay one step ahead of other individuals looking to secure a position in this profitable field.

Aus dem Klappentext

The country's leading hedge fund executive search firm offers a rare look at how to navigate the difficult hedge fund hiring path

Landing a job in hedge funds isn't easy. Competition is brutal, standards are high, and the industry is secretive. With Getting a Job in Hedge Funds as your guide, you'll quickly discover what it takes to get a foot in the door—whether you're just out of school or have several years' experience.

Written in a straightforward and accessible style, this comprehensive resource offers targeted advice for those looking to break into the hedge fund business. You'll learn where hedge funds traditionally look for new candidates, what sort of experience is needed to set yourself up for a position, and what can be done to improve your chances of getting into a hedge fund.

Getting a Job in Hedge Funds also offers case studies of more than two-dozen people who have successfully navigated the difficult hedge fund hiring path. These people candidly discuss what worked for them, what their interviews were like and what, if anything, they would have done differently. Sample resumes and interviewing tips are also included.

If you're seriously considering a career in hedge funds, it helps to understand how they hire. With Getting a Job in Hedge Funds, you'll gain an edge that will allow you to stay one step ahead of other individuals looking to secure a position in this profitable field.

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Getting a Job in Hedge Funds

An Inside Look at How Funds HireBy Adam Zoia

John Wiley & Sons

Copyright © 2008 Adam Zoia
All right reserved.
ISBN: 978-0-470-22648-3

Chapter One

GETTING STARTED

Consider this your pregame pep talk. Before you take the field and set out on your search for a hedge fund position, there are several fundamental things you must know. You should at least be familiar with what hedge funds are, how they make money, and the role they play in the financial markets. In addition, you will need a solid understanding of the different investing styles. Once you know these things, you will be better equipped to begin your search.

The hedge fund market has grown exponentially over the past several years. Although estimates vary, most agree that there are close to 10,000 funds in operation worldwide. According to Hedge Fund Intelligence, global hedge fund assets hit $2.48 trillion at the end of the first half of 2007. Other sources indicate that as recently as 2001, there were approximately $600 billion in total hedge fund assets, whereas 10 years earlier, in 1991, the number stood at $221 billion.

Even more notable than the growth in sheer numbers of funds and assets under management (AUM) is how the industry has evolved into a significant force in the global economy. To say that hedge funds have developed from a cottage industry into one that plays a major role in the financial markets would be a tremendous understatement. Although $2.48 trillion is a staggering number, that figure dramatically understates hedge funds' influence. When the amount of leverage used by hedge funds and the frequency of their trading are factored in, their net impact is even greater. By managing such large amounts of capital, hedge funds have become major players on many of the world's public markets.

BIGGER AND BIGGER

A semiannual survey of U.S. hedge funds by Absolute Return magazine (see Table 1.1 and Table 1.2) found that the four largest hedge fund firms each had more than $30 billion in AUM. In addition to those firms, there were 76 hedge fund firms managing $5 billion or more and 372 with more than $1 billion in AUM. Of those $1 billion+ funds, 246 are based in the United States. And the big funds keep getting bigger. The top five firms-JPMorgan Asset Management (which includes JPMorgan Asset Management and Highbridge Capital Management), Goldman Sachs Asset Management, D. E. Shaw Group, Bridgewater Associates, and Och-Ziff Capital Management-all increased AUM significantly during the 12 months ending July, 2007.

In terms of hedge fund styles, there are more different types of hedge funds operating today than ever before. Some may be considered extremely risky and not for the faint of heart. Others can be more risk averse and just as dependable as a major mutual fund (in select cases some funds have begun acting like mutual funds by charging only management fees). Despite some notable collapses-Amaranth Advisors in 2006 being one of the most noteworthy-most foresee continued growth for the industry.

WHAT IS A HEDGE FUND?

As someone interested in this industry, you probably know that a hedge fund is a privately managed investment vehicle that has the ability to invest in a wide variety of securities. Unlike mutual funds, hedge funds can use aggressive and advanced strategies to make investments (for example, selling short and using leverage). Most hedge funds have high minimum investment amounts, limiting them to wealthy individuals and institutional investors.

Investors in hedge funds are limited partners (LPs), and because their capital may be locked in for a predetermined time period their investments are relatively illiquid compared to other types of investments. In a hedge fund, the general partner (GP) is typically the person or entity that created the fund and oversees its trading activities and operations. In addition to investment professionals-traders and research analysts-hedge funds (depending on their size) can have large teams of non-investment professionals made up of accountants, operations specialists, legal and compliance professionals, and support staff.

Technically speaking, the primary aim of most hedge funds is to reduce volatility and risk while preserving capital and delivering positive returns in all market conditions. To put it more succinctly, the goal of all hedge funds is to make money-both for themselves and for their investors.

Hedge funds make money for themselves in two ways. First, they charge investors an annual management fee. This fee is typically between 1% and 2% of assets under management. Second, hedge fund managers also receive a percentage of the fund's annual profits. This performance or incentive fee can fluctuate from 10% to as high as 50% in a few cases, but usually ranges between 15% and 30%, with the norm being 20%. The remaining profits go to the LPs. Here's how it works: Take a $1 billion fund with a 2% management fee and a 20% performance fee (often called "2 and 20"). Right off the bat, the fund takes in $20 million from the management fee each year, which is typically used to pay salaries and overhead. If the fund is up 10% in a given year (a $100 million profit) it will earn an additional $20 million in performance fees (20% of the profits) that can be used to pay bonuses to the fund's employees.

In Figure 1.1, we have created an organizational chart for a typical hedge fund. Of course, hedge funds all operate quite differently, and you should refer to the chart as a general guide only. You will find that the organization of a specific hedge fund depends on, among other things: the size of the fund, if the fund is organized by industry, and whether it is a single profit and loss (P&L) structure or a multi-strategy fund. You will find organizational charts for single P&L and multi-strategy funds in later chapters.

HURDLES AND HIGH-WATER MARKS

Not all funds make money as neatly as in the example just given. It's very possible that a fund can produce stellar returns one year, but be in negative territory the next. To protect LPs, whose money is locked up, some funds have safeguards in place to make sure their own executives are not getting wealthy at the expense of the LPs. In some cases, if a fund is flat or loses money the hedge fund executives will receive little or no monetary rewards, and that's because of the presence of hurdle rates and high-water marks.

Although hurdles are not used too often, the idea is to only reward the hedge fund managers for a return that is greater than an investor could have gotten in a more secure type of investment. Funds that have hurdle rates do not collect a performance (or incentive) fee unless the performance eclipses a predetermined benchmark-the hurdle.

Hedge funds with high-water marks do not receive incentive fees unless the value of the fund tops the highest net asset value previously achieved. For example, if a fund had a net asset value (NAV) of $1 billion at launch and finishes the first year at $1.2 billion, it would collect a performance fee on the $200 million profit, or 20% return. If in the second year the fund loses ground and falls to $1.1 billion, it would not collect a performance fee. If the fund rebounds and rises to $1.4 billion in the third year, LPs would pay a performance fee, but only on the difference between $1.2 billion and $1.4 billion-in this case $200 million. In essence, high-water marks limit hedge fund managers from entering overly volatile trades that allow them to collect a high...

Details zur Ausgabe

• Verlag: Wiley
• Erscheinungsdatum: 2008
• Sprache: Englisch
• ISBN 10: 047022648X
• ISBN 13: 9780470226483
• Einband: Taschenbuch
• Auflage: 1
• Anzahl der Seiten: 192
• Kontakt zum Hersteller: Wiley-VCH GmbH; product_safety@wiley.com; ; Boschstrasse 12; Weinheim; 69469; Deutschland