What Analysts Do at a Hedge Fund (2024)

Hedge funds are a class ofinvestment vehicles that usepooled fundsand employa number of strategies to earnan activereturn, commonly known asalpha, for their investors.

Unlike an active portfolio manager of a mutual fund, hedge funds often cater to higher net-worth individuals and organizations and may invest in several different asset classes including alternative investments, and engage in strategies other than holding long positions. Hedge funds may also partake in derivatives markets.

A hedge fund analyst is somebody that does quantitative research in order to identify the assets to trade with the fund's money that adheres to its trading strategy and mandate. Analysts may research individual securities, market sectors, macroeconomic trends, or all of the above.

The analyst will then pass this research over to the trading team or portfolio manager who will execute the trades as they see fit. Below, we go over some typical job roles and duties as well as what a hedge fund analyst could expect to earn on the job.

Key Takeaways

  • A hedge fund analyst is tasked with providingguidance to a portfolio manager on how to best structure the hedge fund's investment portfolio.
  • A hedge fund analyst works for a hedge fund, as opposed to another type of buy-side institution. With hedge funds, alternative asset classes, derivatives, and short or delta-neutral strategies may be used.
  • Hedge fund analysts are tasked with finding investment opportunities based on research and due diligence, recommending them to portfolio managers, and then monitoring risk and performance.

Identify Potentially Attractive Investments

A hedge fund analyst continually stays up to date on a wide variety of financial news, macroeconomic trends, and market forecasts. To accomplish this, a hedge fund analyst is required to spend time reading about these items and hold meetings or calls with experts, both internal and external, who provide insight into these types of market forces.

The analyst utilizes this information to form an investment thesis that can be used to identify a specific company's stock/bonds that might serve as a potentially attractive investment opportunity.

Provide Detailed Research on an Attractive Company

Once a specific stock/bond is identified, the hedge fund analyst begins theirresearch, which will help lead toan investment recommendation for the portfolio manager.

This research entails examining the current and future financial well-being of the company that issued the stock/bond, gaining an understanding of the company's current and future standing within the industry in which it competes; exploring the potential market and economic factors that could affect the company in the future; conducting a wide variety of financial analysis of the company to uncover the company's actual valuation; finding reasons why the actual valuation differs from the market's perceived valuation; assessing risks to the actual valuation; and identifying potential company-specific risks of which the market is currently unaware.

The hedge fund analyst uses the information provided by this detailed research to craft an investment recommendation on the company's stock/bond.

Deliver aRecommendation to the Portfolio Manager

Once the hedge fund analyst completes their detailed research analysis, an opinion is formed on the best course of action regarding the company's stock/bond. Abriefyet thorough recommendation is crafted and then presentedto the portfolio manager that outlines the best course of action and any major findings from the research used to come to this conclusion.

All hedge funds have different investment strategies and focus on different financial products; some may be fixed-income oriented while others may focus on equities and futures. When applying to a hedge fund, make sure it is in the area you are interested in.

Monitor Companies That the Fund Invests in

Once an investment in a specific company's stock/bonds is made by the portfolio manager, the hedge fund analyst continually monitors the respective company for any indications that the information used to craft the initial investment recommendation might no longer be relevant. When such an indication occurs, the hedge fund analyst once again conducts research to provide an updated course of action to the portfolio manager.

Hours and Salary

A hedge fund analyst can expect to work hard and be rewarded for doing so. People with this job title will tend to work 12+ hour days—or 60-70 hours a week—and weekends may be necessary in certain instances. Compensation will also be high, surpassing $90,000 total on average in the U.S. Depending on the location and specific role, the salary could be as high as $231,000. Hedge funds are also known to provide generous perks and employee benefits to their teams.

How Much Do Hedge Fund Analysts Get Paid?

The salary range for a hedge fund analyst in the U.S. is approximately between $40,000 and $231,000, with the average being $93,000. The exact salary will depend on the specific firm, job location, and responsibilities of the job.

How Do I Become a Hedge Fund Analyst?

Becoming a hedge fund analyst starts with specific educational requirements and knowledge. It is important to have a strong understanding of finance, financial products, the economy, and various financial markets. Majors in finance, math, physics, and engineering are all suitable majors, though not required. From college, networking with individuals in the hedge fund industry, finding a mentor, and having an internship are all important steps in getting a job at a hedge fund once you graduate.

How Many Hours Do Hedge Fund Analysts Work?

Hedge fund analysts typically work between 60 and 70 hours a week. Working on the weekend is not common but it certainly does happen from time to time. Though working at a hedge fund is not a typical 9 to 5 job, it is less strenuous than investment banking analyst or private equity jobs.

The Bottom Line

The type of detail necessary for a hedge fund's success requires a hedge fund analyst to perform a number of jobs on a regular basis, such as initial identification of a potentially attractive investment in a company's stock or bond, detailed research on the company's securities and a thorough recommendation of action the portfolio manager should take in regard to the company's stock and bonds.

Additionally, once an investment in a company's stock/bond is made by the portfolio manager, it is the job of the hedge fund analyst to continually monitor the company's stock/bond to see if any changes in investment strategy are needed.

What Analysts Do at a Hedge Fund (2024)


What Analysts Do at a Hedge Fund? ›

Hedge fund analysts perform detailed research on stocks, bonds, and other securities; commodities; currencies; and hard assets (particularly real estate). Hedge fund firms use this research to make investment decisions that translate (ideally) into large profits for the firm and strong returns for investors.

What does an analyst do at a hedge fund? ›

Hedge fund analysts perform detailed research on stocks, bonds, and other securities; commodities; currencies; and hard assets (particularly real estate). Hedge fund firms use this research to make investment decisions that translate (ideally) into large profits for the firm and strong returns for investors.

Which qualities do you think a great hedge fund analyst should possess? ›

Analysts at a hedge fund typically have a well-developed passion for following the stock and bond markets and a passion for developing ideas either on the direction of the market or individual securities. Analysts perform the in-depth research, analysis, and due diligence required to make an investment decision.

What do hedge fund analysts do day to day? ›

A hedge fund analyst is somebody that does quantitative research in order to identify the assets to trade with the fund's money that adheres to its trading strategy and mandate. Analysts may research individual securities, market sectors, macroeconomic trends, or all of the above.

Why work at a hedge fund answer? ›

Why Work at a Hedge Fund? Hedge funds are good if you're extremely passionate about the public markets, and you want to follow companies and other securities rather than work on deals. “Extremely passionate” means: You're constantly reading about the financial markets in books and other media.

What do hedge fund analysts major in? ›

Business-Related Majors

in finance can prepare you for a range of hedge fund positions: asset manager, portfolio or equity analyst, and equity trader. A finance-oriented bachelor's degree can also be a great primer for a Master of Business Administration (MBA).

Is it hard to become a hedge fund analyst? ›

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 personality type is a hedge fund? ›

Hedge fund portfolio managers and analysts

“I'm right and I'm all over the details”… D & C personalities dominate hedge funds. Is are wonderful idea generators, but often get shaken out over the life of an investment as the market moves. S types tend to get runover in the hedge fund world.

What kind of research do analysts working for hedge funds perform? ›

Hedge fund analysts are responsible for conducting research and analysis on potential investment opportunities. They work closely with portfolio managers to develop and execute investment strategies.

What technical skills do you need for a hedge fund? ›

The candidates need to have good technical skills in the field of accounting, finance, management, valuation and investment banking. They need to have the passion to explore the stock market with critical thinking.

What is the average age of hedge fund analysts? ›

The average age of hedge fund managers is 40+ years years old, representing 71% of the hedge fund manager population.

How many hours do hedge fund analysts work? ›

Hedge Fund Analyst Hours and Lifestyle

At smaller, single-manager funds, the average might be 10-12 hours per day, for a total of 50-60 hours per week (weekend work is rare). As you move to larger, multi-manager funds, the hours and stress get worse, so the average may be more like 60-70 hours per week.

Is hedge fund analyst stressful? ›

It's extremely difficult to break into hedge funds, and once you're in, the job is stressful and requires long hours and sacrifices. But if you perform well, you can advance quickly and earn high salaries, bonuses, and carry (the profit share from investment returns) in the process.

How stressful is it to work at a hedge fund? ›

Reality: High Stress and Potentially Constant Long Work Hours. Depending on the type of fund, you could work long hours especially when you are just starting. There is a reason why people say at hedge funds your first 6 months is like “drinking from a fire hose.” The role is unlike investment banking or private equity.

How do I study for a hedge fund interview? ›

Hedge Fund Interview: Pitching a Long/Short
  1. Read the “Business Overview” section of the Company's 10-K.
  2. Read at least 2 sell-side initiation reports.
  3. Read or listen to the company's last 2-4 earnings conference calls.
  4. Read the company's latest investor presentation.

What are the cons of working at a hedge fund? ›

On the negative side, the hours are still long and stressful (though better than investment banking hours), job security can be low, and your exit opportunities will be limited.

Do hedge fund analysts make a lot of money? ›

Hedge fund salaries vary a lot based on the fund size, type, strategy, annual performance, and other factors. The most likely range for total compensation at the Analyst level is $200K to $600K USD.

How do you become a hedge fund analyst? ›

Here are eight steps to follow to help you prepare and find a job working for a hedge fund:
  1. Study the financial industry. ...
  2. Earn a bachelor's degree. ...
  3. Secure an internship. ...
  4. Earn a CFA or MBA. ...
  5. Expand your professional network. ...
  6. Find a career mentor. ...
  7. Design your resume. ...
  8. Apply for a position.
Apr 18, 2024

What is the highest paying job in a hedge fund? ›

What are Top 5 Best Paying Related Hedge Fund Jobs in the U.S.
Job TitleAnnual SalaryMonthly Pay
Hedge Fund Attorney$175,207$14,600
Cfo Hedge Fund$157,532$13,127
Private Equity Fund Controller$154,999$12,916
Hedge Fund General Counsel$151,643$12,636
1 more row


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