Most hedge fund managers find the markets to be genuinely fascinating and will click through to the business news, before checking any other feed. Looking deeper into the financial health of various companies and investigating the trends behind financial movements takes dedication.
This level of commitment is required because hedge fund managers supervise the investment tactics of a number of clients. Once a group of contributors has been assembled and have a net worth that’s enough to invest, the real work begins.
What do they invest in?
The fund is applied to stock, real estate, bitcoin, shares and more, with the intention of capitalizing on these investments. Managers use research, coupled with analytical skills and critical thinking, to ensure each fund reaches its financial objective. In order to do this, it’s essential that a clear strategy is in place throughout the process.
What is a hedge fund manager responsible for?
On a day to day basis, hedge fund managers need to be ready for almost anything. Their days are exceptionally busy, even compared to other roles in the financial sector. The tasks they take on are especially varied and they are likely to work in different parts of the workspace, communicating with team members at all levels.
Attracting new investors
For a proportion of each day, the average hedge fund manager will look at new ways of raising capital for future investments. They may get in touch with foundations, pension funds and individuals who have a high net worth, as significant amounts are required to form a partnership and move forward. Hedge fund managers will also add a sizable amount of their personal cash into the pot.
Maintaining an excellent track record
Their ability to attract funds from other investors depends to a large extent on their past performance. As the chief investment officer of Hong Kong-based Solitude Capital Management, MBA graduate and hedge fund manager Joel Werner, inspires trust in investors.
Hailing from the USA originally, he has worked around the world and while in London, grew a $200m fund up to an impressive $4.5bn. A great performance history like this makes it easier to attract substantial levels of capital and means the manager has less work to do in this initial stage.
Keeping current investors in the loop
Managers communicate openly with investors regarding all aspects of the fund. As part of regular briefings, they will explain how the fund’s objectives are being met, talk about the type of strategies being used and report in general terms on progress.
Frequent meetings can reassure investors that their capital is being used wisely. They also confirm the fund manager is sticking closely to financial regulations around hedging and that the risks being taken are reasonable.
Analyzing market trends
Before the markets are even open, hedge fund managers are reviewing the position of their funds and thinking about trading possibilities. Some will work alone, but most act as part of a team and will discuss their ideas with analysts or other managers. Once things get started, it’s important to check what trends, if any, are affecting the funds they are responsible for.
Preparing to trade
The same checking process will be repeated at least once more, usually after lunch and before the day ends. Constant vigilance is necessary because these funds involve particularly high-risk investments. If things are moving, a hedge fund manager will decide what needs to be done and let the team know.
Their team could be made up of analysts who provide information on the market and traders. Once the stock positions are established, and a plan is formed, trading is likely to take place.
Generating returns through investment
After scrutinizing the stock exchange and its impact on their investment securities, managers will select assets to buy. This can be done in collaboration with traders who have their eye on the ball constantly and will provide advice on the best time to buy or sell.
This is the point at which their financial acumen and expertise comes into play, as they utilize complex techniques such as hedging, leveraging and short-selling to build up the fund.
What qualities does every great hedge fund manager possess?
Aside from the professional skills required to get through the day successfully, a hedge manager must also have the right mindset. Instead of feeling exhausted by stress, they are the kind of people who thrive on it and get a buzz from the relentless push forward.
These are confident people who are prepared to take calculated risks without feeling the need to second guess their decisions. This is often down to experience, as well as proven ability. Of course, they are ready for a challenge and enjoy the competitive nature of investing, from taking on the markets to outclassing other hedge fund managers – they love to win.