Career advice for aspiring hedgies

It takes hard work, expertise and commitment to build a successful career in hedge funds, but it is equally important to maintain life balance to avoid burnout, top managers say

New starters at hedge funds given good advice

What advice do you give to investment professionals starting at your company?

 

Jim Meehan, Paamco
In welcoming new employees, I stress the following points on the keys to success within Paamco’s culture.

First, develop an area of expertise. Whether it is portfolio management, risk management or developing solutions for clients, become really good with at least one component of your job. Use this as a foundation for building opportunities to work across the firm to serve our clients and as a way to connect with colleagues across the industry.
 
Second, always be ethical. Do not lie, cheat or steal. Do not even step into any area that can be considered grey. Paamco has a 13-year history of being a fiduciary and trusted adviser for its clients. The ‘honour code’ here is to respect the tradition and legacy of all those who have come before and have worked very hard to develop the strong reputation that we have within the institutional adviser market place.
 
Third, be a good listener. Our clients need to know that we listen to them, that we understand their needs and are willing to help.
 
I also tell employees to maintain balance and be happy. There will always be work to do. Maintaining balance with your family obligations and your own personal wellbeing is important to us and should be important to you. Figure out what you like to do and find a way to do it well at the firm.

If you find yourself not enjoying the work you are doing here then be honest with yourself and us and go on to a new opportunity that will bring you more happiness and satisfaction. We want people who are passionate about helping us achieve our goals as a firm, which takes a substantial personal investment and commitment.
 
Finally, know why this work is important. There are people who get up in the morning to be a nurse, teacher, fireman, social worker or janitor that depend on us doing our job. If we do not, they will have less money to retire with.


Will Andrews, Campbell & Company
We expect employees starting at Campbell to have strong intellectually curiosity. Mathematical skills are necessary but not sufficient for developing investment strategies. Being able to generate creative insights of market behaviours is a key ingredient of any successful investment professional.

It is equally important that investment professionals get to their colleagues across all functional areas of the firm and understand how their role contributes to the overarching goals of the organisation. Establishing a network will help new employees understand the firm’s culture while building alliances with those they may need to do the job.

Whether they are in data entry, administration, facilities management or investment research, every employee has some level of direct influence on the company’s ability to succeed.

Employees also need to understand the products and strategies offered by Campbell and how we serve the needs of clients. New hires should have a basic understanding of what the company produces, as well as the comparative strengths and weaknesses to other competing products or substitutes.

Firms exist through the support of clients. All employees should be generally aware of those that pay the bills.

Finally, we always ask employees to tell us how we can improve. New employees can add tremendous value through offering first impressions and unbiased feedback. This must be asked early on in the process from those not already indoctrinated into the company’s ways since, with each passing day, new hires become ever more used to the way things are as opposed to identifying areas for improvement.


Robert Harteveldt, Trishield Capital Management
The key ingredients to a firm’s success are its people. When we hire someone, we want to make sure they have the appropriate perspective and work ethic. Therefore, we preach to all our new employees to be patient, be diligent, work hard, do not force ideas, do not fall in love with your investments and be a team player.

Investing is a long-term endeavour. Work must be a priority. It needs to be a passion if you are going to find fulfilment.

You must also allow an appropriate amount of time to be with your family and friends so that you stay fresh.

You do not get paid by the investment, but rather by the quality of your work and the success of your investments. If our firm is going to succeed and prosper, it will happen because we all contributed and supported each other.

A person must be prepared to do a copious amount of work initially to ensure they have the best perspective on the investment. You must always think out of the box and consider what your analysis may be missing.

You need to make sure that you are dedicating enough time to your research. You cannot force an idea. If you have any doubt then you should pass on it. You need to understand what can go right, but most importantly, you need to understand what can go wrong.

You need to have a timeframe in which you expect the investment to play out. You need to have patience for your investment ideas to play out. Throughout this period you must stay on top of your investment.

Finally, if an investment goes bad you need to cut your losses. You cannot have an emotional attachment to it. Once you have exited the position, you need to be willing to understand what happened and why it did not work out. You will learn more from your mistakes than you will from your victories.


John Moody, JE Moody & Company (JEM)
JEM trades commodities on a systematic but fundamentally driven basis. Our investment professionals are all researchers with doctorates or masters’ degrees in fields like physics, computer science and computational finance.

We remind new research scientists at JEM to think big picture about the markets and not get lost in the data. We want to start with market observations and fundamental insights and then use rigorous statistical analysis to validate our hypothesis.

Acquiring commodity market knowledge and intuition takes time. Hence, we provide new hires with a roadmap of markets that includes how commodity prices behave differently from financial futures due to supply and demand. We trade commodities on a relative value basis, so understanding the forward curves is key.

JEM’s entire trading staff are also members of our research and development (R&D) team since we believe that watching the markets regularly and hands-on trading experience informs the research process.

Our systematic approach provides consistency in our trading, scalability for a diversified portfolio and highly disciplined risk management. In contrast all major commodity blow-ups (like Amaranth) have been achieved by discretionary managers.

Although many R&D staff have expertise in machine learning, we advise them to build transparent models motivated by fundamental insights rather than do blind data mining. New hires learn rigorous techniques to build robust models that avoid the pitfalls of over-fitting, data snooping and spurious patterns.

A favourite example of spurious patterns that I like to impart to new researchers is astronomers in the 1870s mapping the infamous canals of Mars, which were debunked just 30 years later. These illusions were due to the human eye’s propensity to discern lines in random dots, a classic case of being fooled by randomness.


Hans Stoter, ING Investment Management International
You and you alone are responsible for your own success. Invest in your strengths. Invest in the right relationships. Invest in branding yourself.

Starting at any new firm requires personal commitment, an entrepreneurial mindset and a willingness to start fresh, to take on the responsibilities assigned and to acquire knowledge. Managing your personal PR will help profile yourself within the company and give you that distinguishing edge.

The point is, it is your responsibility to discover how you can make a difference. You need to manage your skills, your capabilities and your personal brand carefully and effectively. That takes time and attention.

Get to know the goals of the firm. Find out how you can help contribute. Get to know the key stakeholders and then make sure you connect with the right people.

We hire people who fit within our ‘shared success’ culture. We like to hire young people, educate them and give them a voice. You are promoted here because of your skills, accomplishments and potential, not just because you have sat in one chair long enough.

We are continuously working to demonstrate that we are a value-adding asset manager – not just for our clients but also for our people and teams – by providing the right resources, incentive structure and business culture. In return we ask you to keep working on your own value proposition, which we will help you with, as well as on delivering a positive contribution to our joint success.

Our goal is to work together to build a company of enduring value. That means working towards and maintaining an excited and engaged client base in a company of skilled, motivated and well-rewarded staff. We do all this while at the same time being an attractive value contributor to our parent company.

Since a lot of competitors are ‘on the move’ today, the main challenge is ultimately to be distinctive – as a company and also as an employee.

Do not try to be everything for everyone. Choose to operate in the areas that you excel in and that contribute to the success of the firm. Always remember that while you can delegate tasks, you cannot delegate accountability because in the end you, and you alone, are responsible for your own success.