UK-based hedge fund Man Group has had a difficult year. Its quant fund AHL has under-performed and lost money and staff as a result. Nonetheless, Man Group CEO Manny Roman has found the time to grant an interview to Markit Magazine, where he talks about his career at Goldman Sachs, the transition to hedge fund GLG and the advantages of being bright - but not too bright.
Buried deep in Manny's interview is his methodology for identifying talented hedge fund managers. If you're thinking of interviewing at Man Group - or at any other hedge fund - you may want to familiarize yourself with it. Roman says a hedge funder's aptitude isn't necessarily reflected by his/her historical performance, especially if that performance is measured over a short period of time. Instead, he says performance can be elicited simply by asking the following four qualitative questions:
1. What is your investment process?
2. What is your edge? What do you do that other people don't?
3. What kind of risks do you take?
4. How do you react when things don't go well?
"By interviewing or asking questions of the manager, you can cut out the whole theory of luck versus trends,” says Roman. "If you can answer these four questions, you’re going to have a good idea of how good a manager this person is.