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Millennials aspiring to a high-flying career in finance eventually start exploring ways to become a hedge fund manager. This job is associated with exceptional financial acumen and the personality that inspires enough confidence in investors to entrust substantial amounts to you, according to Investopedia. A hedge fund is an alternative investment program targeted toward institutional investors and high net-worth individuals. The hedge fund manager uses sophisticated investment management strategies involving securities such as stocks, bonds and commodities along with mutual funds and real estate.
Academic Preparation and Licensing
Hedge fund management requires a thorough understanding of investment and finance. If you are determined to become a hedge fund manager, consider earning a bachelor’s degree in business, finance or accountancy. Many fund managers pursue a master’s degree in a business-related field to prepare for this career.
Hedge funds are not regulated by the U.S. Securities and Exchange Commission in the same way that mutual funds are subject to regulatory oversight. As such, the Series 7 license required for those engaged in third party stock trading is not a requirement to become a hedge fund manager. However, some states may require the Series 65 license for investment advisors since the fund manager will be involved in this aspect to some extent. That said, some states require passing the Series 7 exams and qualifying for a Series 7 license to be eligible for Series 65 licensing.
Other special licensing requirements may apply. Hedge fund managers taking charge of a fund worth over $30 million in investment assets should register as an investment advisor at the federal level to comply with the Investment Advisers Act of 1940. Fund managers involved with commodity futures may need a Series 3 license to register as a Commodity Pool Operator or Commodity Trading Advisor with the National Futures Association.
Preparing for Fund Management Action
Academic preparation and credentials aside, hedge fund management requires discipline, drive and determination. Successful fund managers must be prepared for the frustrations and disappointments of volatile markets. This job also requires networking with the right parties to raise investment funds and to learn from the masters of the game.
Commit to studying the strategies of hedge fund masters to understand the mindset of these experts as they navigate markets that are constantly changing. Develop a mentoring relationship with a fund manager if the opportunity exists. This will give you the chance to experience the ins and outs of fund management, which will help you decide if this field is for you. Internships and externships are ideal opportunities to get your foot in the door, find potential mentors and determine if you have what it takes to succeed in this competitive and fast-paced field. Immerse yourself further in this field by subscribing to newsletters, trade journals and financial bulletins.
Career Track for a Hedge Fund Manager
Expect to start at entry-level positions such as bond trader or financial analyst. A job with hedge fund service providers may not be as prestigious, but it is certainly a way to gain experience and connections. These positions may include risk management, hedge fund administration or brokerage management. Your primary goals at this point are to gain experience, build up your resume and establish connections with people who matter in the industry.
Related Resource: Future Markets in Finance
The career path to becoming a hedge fund manager is not going to be a cake walk. Expect to put in long hours while learning highly sophisticated systems, building a resume that demonstrates successful and profitable strategies, networking and the drive to meet lofty goals in a hyperactive environment.
