Reviewed by Robert C. Kelly
The average workday for a hedge fund manager usually begins early and runs late. Managing a hedge fund is rarely, if ever, a 40-hour-a-week job. However, tenacity, diligence, and a little bit of luck can lead to a handsome salary and a rewarding, high-intensity career.
Key Takeaways
- Being a hedge fund manager is a highly-paid job, but also calls for long hours of intensive work.
- Work days tend to follow somewhat of a routine, with market open and close being the most critical.
- In addition to trading, hedge fund managers must also make sure all of their positions are in order, their models are up-to-date, and their business relationships are strong.
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Hedge Fund Manager Duties
A hedge fund manager is in charge of making investment decisions for a pool of capital commonly provided by investors. These decisions must meet designated requirements for net worth.
Since a hedge fund manager is responsible for handling a portfolio of investments, their position is somewhat similar to that of a mutual fund or exchange-traded fund (ETF) manager.
Important
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.
Here’s what a hedge fund manager’s typical day might look like.
Early Morning: Reviews and Meetings Before Markets Open
4 a.m. Roll over and turn on your laptop computer to watch some of the early morning London trading. Since it looks like the financial world is not going to collapse, you go back to sleep for an hour.
6 a.m. You commute to work with breakfast on the go. If you live in the city, public transit might be your best bet, otherwise you may get stuck in morning traffic jams.
7 a.m. At work before the opening of the New York markets, you spend time reviewing the fund’s current positions by looking at the previous day’s report from your prime broker. You also consider orders to place for the day. After that, you meet with your staff to discuss new trading opportunities and evaluate existing open positions. You then review financial news from a variety of sources.
Morning: Monitoring Markets, Adjusting Trades and Considering Opportunities
8 a.m. As the U.S. markets begin to open, you watch the action unfold to see if anything could significantly impact current holdings or open orders for potential new positions. You may have heard rumors about a possible upcoming merger and make some phone calls to contacts to get more solid facts and additional information.
9 a.m. After the commotion of the open has calmed down, you may catch up on some phone calls and emails.
9:15 a.m. You have an interview scheduled for an analyst position. The interview is interrupted more than once by traders apprising you of arbitrage opportunities or asking if, based on current market action, you want to change price levels on any open orders.
10 a.m. – You monitor market action while reading through the filing papers for a proposed merger by a company that the fund is heavily invested in. Traders continue to pop into your office to run trading opportunities by you. More often than not, you instruct them to use their best judgment, although you might suggest specific parameters under which to make a given trade. You may, perhaps, get a call from a salesperson regarding an initial public offering (IPO) or secondary offering that may interest you.
A Working Lunch
12 p.m. Lunch is at an upscale restaurant, because you’re meeting with either a chief executive officer (CEO), a potential investor, or a fellow fund manager.
Afternoon: Sales Work and Reviews
1:30 p.m. You check all of your market positions immediately upon returning to the office, even though you checked them on your smartphone at least once or twice during lunch. Traders have more questions for you, and you have a scheduled meeting with an equity analyst to discuss taking a position in a tech company.
The afternoon is prime time for making sales calls to potential investors. They typically have questions regarding your investment strategy, risk/return management and the structure of the firm.
News that a company you have a large position in is being investigated by the U.S. Securities and Exchange Commission (SEC) sends the stock tumbling and requires an emergency staff meeting to decide whether to dump the position at a loss or try to weather the storm.
3:15 p.m. One of the companies that you are tracking is holding an analysts call now. You hop on the conference call and let it run on your squawk box. While there may not be much new information gleaned, staying up to date is always important and you might pick up on some nuance or clue that others might miss.
4 p.m. As the U.S. financial markets close, it’s time for an end-of-day meeting to review the status of the fund’s portfolio holdings and hear ideas from researchers, analysts and traders regarding potential opportunities for the next trading day.
4:30 p.m. The day at the office winds down with you reading SEC filings, trade publications, and research reports. This can take an hour or more to compile all the end-of-day paperwork and accounting tasks.
Evening: Social Time
6:30 p.m. You have drinks with your colleagues, paid for by one of your prime brokers. They meet you at the bar to discuss markets and investment strategy.
8 p.m. Because it’s Friday, you can go two whole days without checking price quotes before markets begin to reopen. However, dinner with a prospective fund investor means the workday isn’t done just yet.
What Is a Hedge Fund?
A hedge fund is a pool of money that’s managed by professionals. It’s similar to a mutual fund, except a hedge fund’s investment strategy is typically more aggressive.
What Does a Hedge Fund Manager Do?
A hedge fund manager is the person who is ultimately responsible for conducting the hedge fund’s everyday affairs, such as raising investment capital and rebalancing investments to maintain a given risk/reward ratio. They are usually supported by a team of analysts and traders who conduct much of the necessary research and are in charge of trade execution.
What Are the Top Hedge Funds?
The top hedge funds in the world include Citadel, Bridgewater, and D.E. Shaw.
Where Are Hedge Funds Located?
Many hedge funds are located in New York City, though others have offices elsewhere.
The Bottom Line
A typical day in the life of a hedge fund manager usually involves constant market monitoring and investment evaluation, along with research and sales work. It is a stressful but ultimately fulfilling role, if you can handle the pressure and stay focused.