This sector contains all our jobs in hedge funds. Hedge fund managers have traditionally been the outsiders of the financial services world. Most are highly successful former traders or fund managers who’ve decided to go it alone with a hedge fund career. The name ‘hedge fund’ comes from the idea that money managers can hedge their bets to ensure they make money – whether the market goes up or down. One method of making money in a falling market is through so-called, ‘short-selling.’ Short sellers first borrow the stock they believe to be over-valued, and then sell it on at that price. When the price (hopefully) falls, they buy the stock back at the lower price and return it to the lender.
Hedge funds typically fall into one of several categories, depending upon their investment strategy. These include: Global macro funds (funds focused on global trends rather than movements in particular stocks); event driven funds (funds that attempt to profit from one-off events such as mergers and acquisitions or bankruptcies); or relative arbitrage funds (funds that aim to exploit differences in prices for the same products). A relative arbitrage fund would buy where it’s cheaper and simultaneously sell where it’s more expensive.
Because hedge funds are considered risky, investors can also put their money into ‘funds of hedge funds’. These invest money across several different hedge funds with the intention of spreading the risk.
Various hedge fund jobs are listed under this sector, including analysis (analysing the companies, markets and financial products a hedge fund invests in); sales and marketing and investor relations (liaising with investors and helping sell the merits of the fund).and trading (executing the investment strategy and buying and selling financial products). Hedge fund traders are often pure execution traders, who operate largely according to an analyst’s recommendations.
Hedge funds also employ an array of people to work in risk and in functions like HR and compliance in order to help their business operate effectively.
Many hedge funds are based in Switzerland, particularly in Zurich. London’s Mayfair area is a centre for hedge fund recruitment in the UK. In the US, hedge funds are frequently based in New York and Connecticut. And Singapore is a growing hedge fund centre in Asia.
As the hedge fund industry has grown, it has become more open to institutional investors. As a result, there is an increasing overlap between jobs in hedge funds and those in traditional long only asset managers.