Hedge Fund Career Development Roadmap and Progression

From young analysts to traders and PMs, or more senior fund managers and/or CEOs/CIOs, finance professionals seek growth at different stages of their careers in asset management. Hedge fund career development starts with taking stock of the expected asset management career path, but also the required specialized skills in order to proceed at each stage of the journey.

The Typical Asset Management Career Path

Education and Entry

Hedge fund/asset management careers predominantly start with with a solid education in finance. However, finance graduates don’t usually transit immediately to a hedge fund. Having nimble operations, HFs are less focused on educating finance professionals from the start than other institutions such as investment banks or other institutions. With the industry trends of hedge fund consolidation, there are fewer and fewer HFs being successful starting small and raising talent from the ground up.

Besides finance, there are other possible backgrounds that provide value, mostly as industry specialists, such as specialists in energy, healthcare or technology. As most careers in hedge funds/asset management require very specific research or investment execution skills, having these industry skills is a parallel way to entry, and should be taken into account in your hedge fund career development plan.

Different Paths

After entry, people are usually split between the investment and execution sides, the maximum exponent of both being the CIO and CEO roles, respectively.

On the investment side, professionals usually start as junior analysts, but the path can fork into specializing in analysis/research or becoming an investment professional.

For the research path:

• Junior Analyst/Research Associate;
• Analyst;
• Senior Analyst/Head of Research;

For the investment path:

• Junior Analyst and/or Junior Trader;
• PM;
• Fund Manager;
• CIO;

On the operational side, backgrounds are very different depending on the functions performed. The CIO is many times the CEO as well, unless the fund/firm is big enough to warrant separate functions.

The rate of progress and actual “job ladder” varies greatly depending on the size and background of the fund. Also, the fact that many times professionals mix investment and operations — for example, PMs that also have customer relationship responsibilities — also contributes to the lack of existence of a single, predictable career path.

The Startup Case

Just like in tech startups, where professionals join early when there are few employees in order to rise faster, facing bigger workloads and challenges in return, a very similar logic applies to HFs. Analysts or traders entering at the ground floor can expect promotions to PM or even fund manager much quicker than they would at a bigger, stable investment vehicle, accelerating their hedge fund career development.

Cultivating Skills

You can find specific skills necessary for each position in our post about Asset Management Training Strategies, but at the end of the day, there are some important considerations to take into account:

• In both analysts and traders, career progression and job switches are very much dictated by the specific, specialized expertise they develop. An analyst or trader working on short opportunities for healthcare stocks will amass a specialized amount of knowledge that can help them progress in specific portfolios/funds that support it, but would have to start almost from scratch in different areas;
• For traders/PMs, job performance is mostly equated to recent alpha. While other topics are taken into account, such as money management and risk management practices, at the end of the day, if you’re not earning, it’s very hard to gain more allocations or be promoted;

The Ascension to CEO/CIO

The “transformation” from senior PM to fund manager and/or CEO/CIO of a new fund is one of the key points of inflection in terms of career. Besides the financial expertise — and possibly already some IR skills — gathered so far, the new FM/CIO will have to develop radically different skills.

These range from leadership and talent management of their teams, to organizing fund administration and operations, including but not limited to operations such as risk management, investor management systems, prime broker integrations and many more, through third-parties or by themselves, in order to reach institutional-quality operations as soon as possible in their quest for both higher AuM and alpha. Any professional making this jump should start preparing these skills as part of their asset management career path.

Conclusion: Proper Hedge Fund Career Development

For a professional considering an asset management career, possibly specifically in hedge funds, it’s important to understand first the education and skills usually expected for hedge fund positions, the personality traits and culture fit expected, the average tenure, and also the jump from PM to fund manager/CEO/CIO of their own fund if that is also desired.

Find more of our resources on the resources page, or specifically head to books, articles, reports and/or interviews.