The growing need for quants and other post-graduate engineers at hedge funds has altered the culture at many firms that formerly relied solely on traders to dictate their investment decisions. The new wave of tech-focused hedge fund employees has also created a bit of awkwardness in interviews and during the hiring process, at least for some.
A veteran engineer at Google who recently interviewed at a high-profile hedge fund said he was taken aback by a question that he hadn’t been asked in over a decade. They wanted to know his grade point average in college. “At this point in my career, with my resume, I was surprised they’d care,” he said. His assumption at the time was that the firm was just looking to keep him on his toes. Not so.
“They typically ask everyone, regardless of seniority, and believe that it is a strong indicator of success,” said Drew Froelich, founder of Strategic Growth, a New York headhunter that specializes in front-office asset management placements. Froelich said that clients including big quant funds will sometimes ask him to provide a candidate’s GPA during the submission process; other times candidates are asked to include it as part of their application.
People who have previously worked at hedge funds may not get surprised, but engineers who have worked in other industries or who have gone on to earn their PhD do. A host of computer science grads complained about the exact situation facing the Google engineer on a recent Reddit forum. One engineer with eight years of experience said they felt as if they were a lock for the job when, during an informal chat with the hedge fund’s chief technology officer, they were asked about their undergraduate GPA. The engineer answered honestly and explained why it wasn’t a sterling 4.0. “The next day the recruiter calls me and says it’s a no-go for the original full-time position I applied for. [The] CTO was concerned about my poor GPA,” they said. Somewhat oddly, the firm made the person an offer as a contractor instead, despite the hedge fund's admission that they use GPAs as a way to quantify a person's work ethic.
A PhD-level engineer added that they’d never been asked for their GPA until interviewing with hedge funds. “I thought this was pretty odd because my undergrad was about 5 years ago [and] the concept of ‘PhD GPA’ is kind of stupid since PhD students aren't sitting there taking classes all day,” they said. Other posts came from engineers who were equally unaware of the practice and suddenly found themselves nervous about applying to hedge funds.
A second buy-side headhunter said that hedge funds have always asked the question of prospective traders in an effort to trim down the long list of people who are interested in joining. The practice simply hasn’t stopped during the recent quant takeover. “It’s one of the questions I always ask up front,” he said. People who are new to the industry, particularly those with post-graduate degrees, can sometimes act as if it’s an insulting question, he said. “I’d rather them respond to me like that than with a client.”
In short, if you apply for any job at a hedge fund, be prepared to provide your GPA. They may not always ask for transcripts, “but keep in mind that if you are found to be dishonest in any part of your interactions, there will be a bad outcome,” Froelich said.
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FAQs
A veteran engineer at Google who recently interviewed at a high-profile hedge fund said he was taken aback by a question that he hadn't been asked in over a decade. They wanted to know his grade point average in college. “At this point in my career, with my resume, I was surprised they'd care,” he said.
What questions do hedge funds ask? ›
They are:
- Why hedge funds & not private equity?
- What is the best business in the world?
- What's the biggest risk you've taken in your life?
- Who's your favorite investor?
- Pitch me a stock.
- If you could only use one investment metric, what would you use to tell a good investment opportunity?
Behavioral Questions:
- Tell me about yourself. ...
- Why do you want to work for a hedge fund?
- Do you have an industry preference?
- What do you plan to do in the next 5-10 years?
- Have you had a performance review? ...
- What skills do you feel are transferable to this industry?
- What separates you from other candidates?
Hedge funds employ some of the best-paid business professionals anywhere, but landing your first job in the industry is no cakewalk. Building a hedge fund career takes determination, networking stamina, and a fierce competitive streak. Here are some steps to help get you to that interview and then land that job.
What is the first round of hedge fund interview? ›
You will get the standard investment banking behavioral questions: Tell me about yourself, talk about your deal experience, why do you want to work at a hedge fund, why do you want to work at this fund, etc. You will also need to be prepared to answer accounting, modeling, and stock market questions.
What is the 2 20 rule for hedge funds? ›
The 2 and 20 is a hedge fund compensation structure consisting of a management fee and a performance fee. 2% represents a management fee which is applied to the total assets under management. A 20% performance fee is charged on the profits that the hedge fund generates, beyond a specified minimum threshold.
What are the cons of working at a hedge fund? ›
Hedge fund work is more specialized than private equity or investment banking, so you have less mobility. The hours don't necessarily change much at each level, and in some ways, PMs have the most stressful jobs of anyone.
What is the minimum salary for a hedge fund? ›
While ZipRecruiter is seeing salaries as high as $242,849 and as low as $32,804, the majority of salaries within the Hedge Fund jobs category currently range between $66,587 (25th percentile) to $117,017 (75th percentile) with top earners (90th percentile) making $165,000 annually in California.
How stressful is hedge fund? ›
It's extremely difficult to break into hedge funds, and once you're in, the job is stressful and requires long hours and sacrifices.
How do hedge fund managers get so rich? ›
Hedge funds make money as part of a fee structure paid by fund investors based on assets under management (AUM). Funds typically receive a flat fee plus a percentage of positive returns that exceed some benchmark or hurdle rate.
Hedge funds are widely regarded as offering significant earning potential. Junior level employees are able to achieve salaries upwards of $500k in some places, and the best fund managers can see their net worth ultimately reach nine or even ten figures.
What are the best paid jobs in hedge funds? ›
The average hedge fund manager makes a more modest $145,437 per year. However, given the commission based pay structure of most hedge funds, there is no upper limit to how much hedge fund managers can make, and that's what puts them at the top of our list of highest paying finance jobs.
What majors do hedge funds look for? ›
Hedge fund managers often have a master's degree or even a Ph. D. in finance, mathematics, economics, financial engineering, quantitative finance, programming, marketing, or business administration. Others have advanced degrees in a specialty such as engineering or accounting.
How to prep for hedge fund interviews? ›
“Preparation” for hedge fund interviews means coming up with 2-3 solid investment pitches, working on spinning your pitches into sounding like deals and then taking a strong view of each one, and making sure you can explain your market views coherently.
Why is the final interview only 30 minutes? ›
A lot of companies believe it is better to have you interview with a larger number of people, and it is faster and easier to do that if you keep the interviews to 30 minutes.
How much do first year hedge fund analysts make? ›
What Is A Hedge Fund?
| Role | Base Salary | Average Bonus (% of Base) |
|---|
| Junior Analyst | $70,000 - $100,000 | 25% - 50% or more |
| Analyst | $100,000 - $150,000 | 50%+ |
| Senior Analyst | $150,000 - $250,000 | 70%+ |
| Portfolio Manager | $200,000 - $250,000 | 70%+ |
1 more rowIn simple terms, a hedge fund is an investment firm that seeks out alternative investments to beat the overall market or reduce the risk of unforeseen events. They use a diverse range of investment strategies, most of which are not available to mutual firms or traditional asset management firms.
What do hedge funds have to disclose? ›
Hedge funds will be required to disclose more information about operations and strategies and to report separately on each component of a fund. They must also separately report details on their crypto investment strategies, which the regulators have set apart from reporting on cash and cash equivalents.
What is a typical hedge fund return? ›
Historical studies show that as hedge funds tend to perform well during periods of high, stable interest rates, survey respondents have upgraded their return targets since 2022 to 9.06% from 7.45%, marking the highest such level in more than 10 years as they expect moving into a high stable rate environment.
How much money do you need to give to a hedge fund? ›
It is not uncommon for a hedge fund to require at least $100,000 or even as much as $1 million to participate. Unlike mutual funds, hedge funds avoid many of the regulations and requirements within the Securities Act of 1933.
