Want a job in a hedge fund? Why the CFA won't help much
If you work in asset management, getting the CFA is both de rigueur and a badge of honour that shows you have the diligence and intelligence to make it through 300 hours of study for a notoriously gruelling qualification. If you want to get a hedge fund job, though, the message is to find another route in.
Just 3%, or 3,154 of the nearly 110,000 CFA charterholders globally work for a hedge fund, according to stats provided by the institute. The vast majority (2,136) are based in the U.S. People working in equities and fixed income, namely those in asset management firms, meanwhile, comprise a combined 57% of the total.
Hedge funds are known for demanding impeccable academics at the junior level, as well as quantitative funds hoovering up maths and physics PhDs, but qualifications are generally a secondary concern.
“I’ve never had a hedge fund client demand that a potential hire has to have a CFA,” said Anthony Keizner, managing director of Glocap, which focuses on hedge fund recruitment. “Track record, pedigree, smarts yes, but not a specific formal qualification. In general there’s a bias at hedge funds towards ‘real life’ experience (investment performance, work history) over ‘academic’ experiences.”
Similarly, Michael Martinolich, a hedge fund-focused partner at headhunters Caldwell Partners, said that it’s “all about consistent outperformance” when it comes to hiring for hedge funds. “You give me one candidate with a solid track record and put them up against someone with the CFA and medicore performance, then the first person wins hands down.”
Some recent hedge fund hires suggest that academic qualifications are simply a hygiene factor early in the career. Isidro Fernandez, who joined Capula Investment Managers as a European Special Situations portfolio manager in August, has a BA in Political Science from Harvard, gained in 1993, for instance. Lawrie Inman, who joined Tudor Capital this month, has degree from Swansea University, but his reputation as a star trader secured the role. Meanwhile, both Carl Icahn and George Soros have philosophy degrees.
However, it’s not as though a CFA won’t open any doors to a hedge fund. One portfolio manager working for a hedge fund in Switzerland tells us that, although neither he nor many of his friends possess the charter, it can be a handy CV booster and is “valued by certain types of funds”.
“More trading-oriented funds have typically less interest in professional qualifications, assessing people mostly on investing experience,” said Keizner. “However, firms following more fundamental strategies want their people to be able to understand the ‘bigger picture’, analyse comparable companies and the industry sector, and interact with corporate management, and in this context there is more value in CFAs and even MBAs.”
“Macro strategies and long-short funds where the holding period is longer are more likely to hire CFAs,” said Martinloch.
Qualifications like the CFA also come in handy for those wanting to switch careers into the hedge fund sector. “CFAs are most useful for ‘alternative’ candidates (coming from industry or consulting rather than from banking) as it can help demonstrate the person is financially savvy, aware of the markets and dedicated to the investment world,” said Keizner.
This is a similar situation for the Chartered Alternative Investment Analyst (CAIA) qualification, which is more aimed at working in the alternatives sector. Around 50% of the candidates taking the qualification last year did so to switch careers, according to Thomas A. Porter, managing director and chief operating officer of CAIA.
Then there's the fact that it could open doors in certain parts of the world. In Asia, there are just 370 CFA charterholders working in the hedge fund sector, but it's the fastest growing region for people signing up to the CFA. “The CFA is much more valued in Asia, where there’s more of an emphasis on professional qualifications,” added the portfolio manager.