Guides / Career guides / Hedge funds
Hedge funds: where your ideas are your scorecard.
Hedge funds invest for professional investors using strategies like long/short equity, macro and event-driven. Most analysts join after a few years in banking, private equity or research, and pay follows performance.
Fundamental investing
Long/short equity, event-driven and credit funds, where analysts research companies and pitch ideas.
Macro and systematic
Funds that trade rates, currencies and commodities, or use models and data to drive decisions.
Banking analyst or hedge fund analyst?
| Compare | Investment banking analyst | Hedge fund analyst |
|---|---|---|
| How you get in | Online applications to summer internships | Usually after 2–3 years in banking, PE or research; a few funds hire graduates |
| What interviews test | Accounting, valuation and deal knowledge | Stock pitches, a case study or modelling test, and your investment process |
| How you are judged | Quality of work and deal execution | Whether your ideas make money, and how you manage risk |
| Pay | About $100k–$125k base in the US | Entry-level analyst base around $100k–$150k in the US, with bonuses tied to performance |
Figures from published guides; they vary widely by fund, strategy and year.
A typical day in hedge funds.
A realistic junior day on a normal week. Live deals, results seasons and market shocks make it longer.
- 6:30
Check overnight news and positions; markets in Asia and Europe may already be moving.
- 7:30
Morning meeting with the portfolio manager on positions and risk.
- 9:30
Markets open. Watch the stocks you cover and react to news.
- 11:00
Research: calls with experts, companies and analysts on your ideas.
- 14:00
Update models and write up a new idea for the portfolio manager.
- 17:00
Review the day’s performance. Hours average around 50 a week, but results seasons are intense.
The career ladder and pay.
| Level | Typical years | What you do | All-in pay |
|---|---|---|---|
| Junior analyst | 0 to 3 years | Researches ideas and supports a senior analyst or PM | $200k to $400k |
| Analyst | 3 to 6 years | Owns ideas in a sector; pay depends on the profit they generate | $300k to $800k |
| Senior analyst | 6 to 10 years | Runs a big part of the book or a sector | $600k to $2m |
| Portfolio manager | 8+ years | Manages capital and risk; paid a share of the profits | Highly variable, from $1m to far more |
Approximate all-in pay (base plus bonus) in US dollars at large firms in New York in recent years. London is usually 20 to 30% lower; smaller firms and other cities pay less. Bonuses swing with the market.
How recruiting works.
Most hedge funds hire analysts from investment banking, equity research or private equity, often through headhunters. The largest multi-manager funds also run graduate programmes and internships.
Expect a stock pitch, a case study (often a long take-home on a company) and many conversations about how you think. Funds want people who form their own views and change them when the facts change.
Who hires.
| Type | Examples | What it’s like |
|---|---|---|
| Multi-manager platforms | Citadel, Millennium, Point72, Balyasny, ExodusPoint | Many independent teams, each with its own capital and strict risk limits. |
| Single-manager funds | Long/short, activist and event-driven funds of all sizes | One investment team and process; culture depends on the founder. |
| Macro and quant funds | Bridgewater, Brevan Howard, Two Sigma, D. E. Shaw, Renaissance Technologies | Trade economies, rates and markets, or use models and data. |
Firm names are examples, not a ranking or an endorsement.
Are you ready to apply?
Tick what you can honestly do today.
Your plan, step by step.
- Before you apply
Start investing on paper
Keep a journal of ideas, with dates and reasons. It becomes evidence of how you think.
- 6 months before
Write two full pitches
One long and one short, each with a variant view and a catalyst.
- 3 months before
Get feedback
Share your pitches with people at funds and in research. Improve them.
- Interviews
Defend your view
Expect tough pushback. Show you can change your mind for good reasons.
Where it leads.
Starting your own fund
Some experienced PMs launch their own funds.
Family offices
Managing money for wealthy families, often with longer horizons.
Long-only investing
A move to more stable, longer-term investing.
Myths and reality.
“Hedge funds are all about high-frequency trading.”
Most hedge fund analysts do fundamental research on companies or economies.
“Hedge funds don’t hire graduates.”
Some do, especially the large multi-manager platforms, but most hire from banking and research.
What to read.
- More Money Than God by Sebastian Mallaby. A history of hedge funds.
- Margin of Safety by Seth Klarman. A well-known book on value investing; often discussed in interviews.
- Value Investors Club and Sumzero write-ups. Real pitches to learn the format from.
What they ask in hedge fund interviews.
Expect to pitch ideas and defend them under pressure. Try each before you open it.
Stock pitch Pitch me a stock.
Give your recommendation and target, two or three thesis points, why the market is wrong, the catalyst, the valuation and the main risks, in two to three minutes.
Short pitch Why is “it’s overvalued” not enough for a short?
Expensive stocks can stay expensive. You need a catalyst that will make the market change its mind, and you must consider borrow costs and squeeze risk.
Exposure A fund has $120m long and $80m short on $100m of capital. What are its net and gross exposure?
Net exposure is 40% ((120 − 80) ÷ 100); gross exposure is 200% ((120 + 80) ÷ 100).
Merger arbitrage A target agrees a $50 cash takeover and trades at $48. What is the spread, and what is the risk?
About 4.2% ((50 − 48) ÷ 48). The risk is the deal breaking, for example on regulatory grounds, and the shares falling back.
Risk Your short rises 20% after you put it on. What do you do?
Re-test the thesis: has anything changed? Then act according to your risk rules, rather than averaging up on emotion.
Fit Why hedge funds?
Show you love forming views and being measured on results. Back it with ideas you have researched and tracked, including ones that went wrong.
Test yourself: hedge funds
Questions from the Mandate app. Try each before you open it.
How do hedge funds usually differ from mutual funds?
Fewer restrictions and performance fees. They can short, use leverage and trade derivatives more freely.
A long/short equity fund…
Buys stocks it likes and shorts stocks it doesn’t. Returns come from stock picking on both sides.
A market-neutral fund aims for…
Returns that don’t depend on the market’s direction. Net and beta exposure are kept near zero.
A global macro fund bets on…
Moves in rates, currencies and commodities. Positions reflect views on economies and policy.
The hedge fund track is live in the app.
Hedge fund strategies, shorting and risk, stock pitches and fund performance, on top of the Mandate core technical units.