Do hedge fund jobs pay well?
Yes, you can no doubt make a lot of money in this industry. There have been years when my friends and I have made $1MM+ bonuses but also years when we have made nothing. Working at a hedge fund is one of the careers paths to get a top 1% net worth, but certainly not an easy one.
The money is a big draw as well: if you're at the right fund and you perform well, you can earn into the mid-six-figures, up to $1 million+, even as a junior-level employee. The top individual Portfolio Managers can earn hundreds of millions or billions each year.
If you're a day trader, it will be extremely difficult to win hedge fund jobs because trading a small amount of your own money is very, very different from taking positions worth millions or tens of millions.
Long and stressful days
The day for hedge fund managers is very long and full of stressful hours. The end of the market day doesn't necessarily mean that they are done for the day. Many hedge fund managers run positions in overnight markets so they will need to monitor those trades, often late into the night.
Rather, interviewees responded that they love the ability to make an impact, to work with experts, and to grapple with difficult questions. The urge to grapple with difficult questions seems to be what attracts people to the industry in the first place. The work done by hedge fund firms is incredibly complex.
On the negative side, the hours are still long and stressful (though better than investment banking hours), job security can be low, and your exit opportunities will be limited.
Working at a hedge fund can be very lucrative as salaries are high and the associated perks can also be considerable. 1 But to qualify for a job in this competitive industry requires multifaceted skills, knowledge, and the right temperament.
Although they share the same responsibilities as Junior Analysts, they have more independence to focus on longer-term projects or ideas and specific investment theses. They can expect their base salary to start at about $100,000 and increase to about $150,000 over a few years.
The Bottom Line. Business-related majors make sense for working in finance but they aren't the only majors that hedge funds look for. Engineering, math, and statistics are also valuable majors in the world of hedge funds. Remember that hedge funds cater to high-net-worth, accredited investors.
Hedge fund analysts typically work between 60 and 70 hours a week. Working on the weekend is not common but it certainly does happen from time to time.
Why do hedge fund guys make so much money?
Why Do Hedge Fund Managers Earn So Much? Hedge fund managers' earnings are usually based on management fees and a percentage of the profits they earn, known as a performance fee. The more assets they have under management, and the higher the profits they earn for their fund, the more income they make.
However, because hedge funds are typically much higher-risk portfolios that are more actively traded, they require close monitoring and a greater amount of day-to-day hands-on management and decision-making regarding investments.
On average, hedge fund traders often work long hours, ranging from 50 to 80 hours per week. The specific workload can depend on the fund's strategy, market conditions, and individual firm policies. During peak periods or when significant market events occur, traders may put in even longer hours.
“If they are in jeans, dress business casual,” he said. “If they are business casual, wear something like a jacket with no tie.” He said that none of his current hedge fund clients have a suit-only dress code. While jeans may be a bit over-the-top at some firms, so is overly formal dress.
Apply for a position
After earning your degree, completing an internship, finding a mentor, expanding your network and creating a resume, you can apply for a position working for a hedge fund. Research companies that best fit your goals and expectations and look for open entry-level positions.
Read the last 2 years worth of press releases via the company's website. Read the last 6 months worth of sell-side equity research. Learn about the industry and company competition. Understand the general investor sentiment around the company (i.e., are sophisticated investors bullish or bearish on the stock?).
It is not uncommon for someone with 5 to 10 years of experience (if they last that long) to secure hedge fund salaries that are close to US$ 1 million per year. If you start your own hedge fund, though, hedge fund salaries get a little more complicated.
If you stick to investment banking, in the long run, you will earn millions. But the payoff in hedge funds is much more. Your earnings may reach a billion dollars. The idea is to do some soul-searching before you start so that you can pull through in tough times.
Hedge Fund Analyst Hours and Lifestyle
At smaller, single-manager funds, the average might be 10-12 hours per day, for a total of 50-60 hours per week (weekend work is rare). As you move to larger, multi-manager funds, the hours and stress get worse, so the average may be more like 60-70 hours per week.
The average age of hedge fund managers is 40+ years years old, representing 71% of the hedge fund manager population.
Who is the highest paid hedge fund manager?
The top earner was Ken Griffin, founder of multistrategy giant Citadel. He personally made $4.1 billion — the most any hedge fund manager has ever earned in the history of the Rich List.
Yes, you can certainly still trade for yourself while working for a hedge fund. However, you need to be aware of any potential implications that may arise from your pursuits. You may be under a 'Chinese wall' in your hedge fund, meaning that you are solely working with that industry and not trading for yourself.
Junior analyst: $100K approx, split more or less evenly between a base salary and a bonus. Hedge fund analyst: $150K-$200K, with bonuses typically bringing the salary above $500K in a good year. Senior analyst: $1 million approximately, with most of this being the bonus.
Hedge funds can be high-stress environments, as they often involve managing significant amounts of money, making complex investment decisions, and operating in a highly competitive and volatile financial industry.
Hedge fund analysts work market hours: getting into work around 7 a.m. and leaving around 6 p.m. This is quite a change from the 90-100 hour investment banking hours some are accustomed to. Typically, hedge fund analysts are not expected to work weekends or holidays.
