Hedge fund career guide part 6: Why work for a hedge fund?

singapore-hedgethinkThere are lots of reasons why you might choose a career in hedge funds. Sure, it’s a tough business to get into – and to stay in – but those who have built successful careers in the industry will tell you that it is undoubtedly worth it.

Recent problems in the industry, stemming from the financial crisis of 2008, have cast some doubts as to whether it is still worth all the trouble, especially with so many people in the financial sector losing their jobs or taking home smaller bonuses. However, there is still plenty of money to be made in hedge funds, and that wealth still has an strong attraction for many students, workers, and entrepreneurs. So, why should anyone want to work for a hedge fund?

It’s stimulating work. The various functions of hedge funds require a wide range of skills and abilities. Whether you are involved in designing a fund, setting out and executing its strategies, or marketing it to potential investors, hedge fund work can prove an invigorating challenge. As well as the challenges involved in managing or overseeing a portfolio of investments, you have to walk the line between serving the purposes of your profit-hungry clients with making sure that your corporate practices are legal, responsible, and profitable.

It suits a wide range of skill sets. Hedge funds need a wide variety of specialised and transferable skills, including investment banking, accounting, business, accounting, and economic analysis. So, whatever your finance specialism, you should be able to find a role that suits you.

Every fund is different. Some of the smallest funds might be run just by one or two very busy traders, while the biggest ones might have hundreds of traders and back-office staff working towards a common goal. So whatever your preferences in terms of the working environment, you should be able to find a hedge fund that fits your preferences.

Big basic salaries. Most jobs in the hedge fund industry will pay a base salary of at least $100,000, and some jobs pay a lot more.

Big bonuses: Unless a hedge fund is having a particularly bad year, the bonuses you will receive will far outweigh the basic salary. And in a good year, it can dwarf it.

So, we have established that the hedge fund industry is a good one to get into if you want to make a LOT of money. But just how much are you actually likely to make? A lot depends on your skill level, the performance of the fund(s) you work for, and the market conditions, but the following hedge fund salary details from Alpha Magazine should give you a rough idea:

Single Manager Hedge Fund CEO Salary Figures (Average)

  • Base Salary: $475,199
  • Cash Bonus: $2,568,972
  • Non-cash Bonus: $5,231,502
  • Total compensation: $3,784,076

Junior Analyst Hedge Fund Salaray Figures (Average)

  • Base Salary: $93,634
  • Cash Bonus: $143,496
  • Non-Cash Bonus: $43,711
  • Total Compensation: $253,710

Senior Trader Hedge Fund Salary Figures (Average)

  • Base Salary: $306,085
  • Cash Bonus: $548,491
  • Non-Cash Bonus: $2,235,573
  • Total Compensation: $1,633,406

So, you can see why the competition for jobs in the hedge fund industry is so fierce – and why it is worth going the extra mile to get your foot in the door and work your way up the ladder.

Of course, it could be that a career in hedge funds isn’t for you. Certainly, if you value your spare time, or have extra-curricular activities that you want to prioritise over the day job, then it may not be the ideal fit for your lifestyle. If, however, you live to work, and are willing to put in the extra hours to give yourself as good a chance of success as you can muster, then you will find it to be one of the most rewarding – not least financially – career paths around.