You have to pay your dues when you enter any industry, but starting out at a hedge fund has the reputation for being more difficult than the early stages of most jobs.
Some hedge fund managers take a Darwinian sink-or-swim approach to onboarding, eschewing mentoring or in-depth training in favour of shouting instructions and cursing out junior analysts who make mistakes.
That said, there are plenty of hedge fund partners and portfolio managers who happily serve as mentors and provide training that leads to a smoother onboarding process. Increasingly, as talent dries up from investment banks, larger hedge funds like Brevan Howard and Man Group are rolling out their own training programmes.
The high pay for front office jobs at an entry level in hedge funds continues to be a significant factor in persuading people across to the sector, but what is life really like? Based on conversations with hedge fund professionals – who wished to remain anonymous – this is what it takes to make it in the early days of a hedge fund career.
From His Girl Friday to operations specialist
After a decent-sized New York-based hedge fund hired Hillary (not her real name) right out of undergraduate business school, she had to make it through a trial period of serving as a “Girl Friday,” completing menial tasks around the office, running errands all over the city and ordering lunch for the partners and portfolio managers.
After a couple of weeks of that, they offered her a better job in the operations department, where she settled trades and handled various accounting responsibilities.
There were certainly benefits, from free transit cards and free car rides home for those staying in the office later than 8 p.m. to three meals a day paid for and a bonus at the end of the year. She maxed out her 401(k) contributions.
“We ate great meals at good restaurants with really good wine – what more could you want?” Hillary said. “There were lots of perks – traders would give us tickets to sporting events if they weren’t using them.”
When the grim reaper changes the code on your office door
On the other hand, she worked long hours without many vacation days.
Even though she was in operations, she worked at a desk in the trading room, where “intense energy and high-level craziness” with “people yelling at each other, using foul language” was the norm.
Also, it was incredibly male-dominated.
“When I first started, I was one of only 10 women working at the company, and most were secretaries,” Hillary said. “It was a little weird to be in such a minority.”
All of that was expected. Far worse was coming back after going out to get lunch or a coffee, typing in her building code – the correct one – but not being able to get in.
“If your code didn’t work, you knew someone had been fired, but you had to guess who – was it me this time?” she said. “All of the sudden the grim reaper would change the code on the door and you see someone escorted from the building.”
People got fired all the time on the trading side, which was much more volatile and stressful than for operations specialists. Traders had to produce or they were gone in an instant, which is still the case.
If the hedge fund where you work makes you miserable, join a different one
For all the megalomaniacs working in senior hedge fund roles, there are just as many people willing to mentor juniors and put effort in with their colleagues, according to one US hedge fund professional.
“Some senior guys never give you credit when you do a good job and complain when one minor thing goes wrong,” he says. “Some portfolio managers and principals are great to deal with and some can be difficult assholes, but it’s no different than the diversity of personalities that you encounter in the general population.”
Work/life balance varies
At some hedge funds, junior analysts have to burn the midnight oil, doing research and completing various tasks long after the markets have closed and the senior executives have left for the day. At others, everyone leaves together at a more reasonable hour.
A lot of people are leaving investment banking to move into a hedge fund or private equity role, and they actually start working fewer hours. Hedge fund traders are expected to stay late during earnings season, but at least they typically have a more normal schedule than many investment bankers.
“Sometimes banking hours would be a bit longer with more weekend hours, and hedge funds are happy to have [former investment bankers] because they are used to working those long hours, plugging away at all hours of the day or night,” said Katie Cunningham, vice president in the hedge fund practice at Glocap, a recruitment firm.
Finding a mentor is key
Some hedge funds are very focused on mentorship and training, emphasizing learning and career growth. Others want people who are much more plug-and-play, self-starters who can are up to speed or can come up the learning curve quickly and don’t need a lot of hand-holding.
That said, hedge fund firms have had to adapted to attract talented younger workers, complimenting their work, moving to an open office layout, in-house gym memberships, foosball or ping-pong and the kitchen stocked with drinks and snacks.
“I think a lot of these hedge funds have adjusted and mimicked some of what the tech firms are doing, because they realize they’re competing for the same talent that the Facebooks and Googles are attracting,” Cunningham says. “They’ve had to make adjustments to office environment to attract these people.
“Not all of them, but we’ve seen big hedge funds put some of those same things in place in order to attract this type of talent,” she says. “The response [from millennials] has been good.”
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