What Does a Hedge Fund Manager Do

Hedge fund managers oversee their clients investment portfolio by using advanced investment strategies to maximize returns. The job profile is lucrative and individuals with a thorough understanding of the financial markets will do well in this profession...

The term hedge fund came in to prominence in the middle of the 20th century, where large private investors put their money in diverse range of assets to increase their profits.

Hedge funds are unregulated as the investments are large and require sophisticated investment strategies. The US law requires that the majority of the investors in the fund be accredited and should have a net worth of more than 1 million dollars.

Such large funds need to be managed professionally and therefore investors will enlist the help of a hedge fund manager to undertake this responsibility. Hedge fund managers are experienced individuals who have a good knowledge of the prevalent economic conditions, both in the domestic and international markets.

Large institutional investors including pension funds, university endowments and foundations hire hedge fund managers to handle their investments.

One of the most important things a hedge manager does is to attend client meetings to discuss advanced investment strategies. They are also required to build an effective business relationship with the clients.

A hedge fund manager will also call for meetings with financial analysts to discuss the various investment options. In these meetings they advise the stock traders about business strategies to balance risky investments.

Hedge fund managers study the domestic and international stock markets to make aggressive long and short-term investments. They have to use strategies like taking leveraged and derivative positions in the markets to generate high returns on the investment.

They are responsible for ensuring good returns irrespective of the overall market conditions. Arranging audit reports in coordination with the accounts department is one of their administrative duties.

They have to review large volumes of statistical data to make speculative investments which may carry risks. Hedge fund managers have to use advanced financial computing software in course of their duties to get investment ideas.

They look for equities and commodities to invest in, for making profit for the clients. Analyzing the prevalent economic and political conditions is an important aspect of the hedge fund manager job description.

Calculating the net asset value (NAV) on the clients investments and generating reports pertaining to this aspect and presenting them to the clients is one of their responsibilities. Hedge fund managers also prepare quarterly and annual financial reports detailing the profit and loss ratio of the investments.

They are also in charge of hiring financial analysts to oversee certain investments and for surveying market conditions.

If you check the list of the top 10 hedge fund managers you see that they earn mind-boggling salaries, that even cross the billion dollars a year mark. However, this is a select group, the average hedge fund manager salary according to statistics hovers between USD 150,000 to USD 200,000 per year.

Investors generally pay high performance bonuses on top of the salaries especially when the NAV rises. The geographic location of the job also plays a major role in deciding the hedge fund manager salary. Individuals employed in New York take home comparatively larger pay checks than those working out of rural settings.

Individuals having good analytical skills and mathematical acumen do well in this profession, earning enviable salaries. Investors prefer hedge fund managers who have experience in related fields like banking and accounts to spearhead their operations.