| Introduction | | | | firms. It is therefore possible to find that an |
| The Career to be analysed fall under the hedge | | | | associate has received a very good foundation |
| fund industry where a hedge fund can be defined | | | | for their career. |
| as an investment fund which is available to | | | | Analysis of hedge fund |
| restricted investors and one which expects those | | | | The Human Capital theory was put forward by |
| investors to pay a performance fee. Hedge funds | | | | Smith Adam. He defined human capital as that |
| are privately run and can be likened to equity | | | | part of technical knowledge and skills that can be |
| funds. These sorts of investments have gain | | | | seen in labour. Consequently, there is a need to |
| considerable mileage within the financial sector as | | | | move away from the traditional definitions of |
| they have grown substantially. The name hedge | | | | labour where labour was considered as one of the |
| comes form the fact that managers running a | | | | factors of production. Smith brought out four |
| hedge account need to make additional trades in | | | | major types of capital necessary for any type of |
| order to minimise the risks associated with their | | | | business. These were buildings for revenue |
| current portfolio. Price fluctuations are usually | | | | generation, machines used in business, modification |
| reduced through purchases of both long term and | | | | of land and lastly human capital. (Becker, 1993) |
| short term positions within the same securities. | | | | Smith believed that in order for one to have |
| Hedge funds differ form other types of careers | | | | certain talents within their work place, they need |
| on the financial sector because of the nature of | | | | to acquire knowledge through the use of all the |
| business. Hedge funds are not as regulated as | | | | avenues available to them. This could include the |
| other investment or financial institutions. | | | | use of education, apprenticeship, study and many |
| Consequently, most of them may not be as well | | | | others.The process of acquiring this knowledge |
| structured as the other conventional investment | | | | can be considered as some sort of investment. |
| institutions. Hedge funds are usually centred on | | | | This is because they will involve an expense and |
| the hedge fund manager. This is the person who | | | | the knowledge will remain with that individual or |
| will conduct most transactions; he may be in | | | | use in his or her life. It may be related to a |
| charge of marketing, human resource, operations | | | | machine that requires certain finances for |
| and many others. (Alec, 2007) | | | | acquisition but as soon as it has been acquired, it |
| However, it should be noted that in larger hedge | | | | will bring in more profit for a given company. |
| funds, there is more division of labour as there | | | | Smith considered human capital as skills and these |
| may be operational managers and others. Even | | | | skills could be improved through education and the |
| the manners of conducting business within these | | | | issuance of on the job training. He also believed |
| hedge funds will depend upon the type of | | | | that the more one invested into human capital, |
| organisation chosen. Therefore employees are | | | | the higher their rate or returns. However, it |
| expected to be versatile. | | | | should be noted that this has a limit. One cannot |
| Existing work experience | | | | simply invest continuously without checking on |
| In order to make it in the fast paced yet exiting | | | | excess consumption. There is a limit to the level |
| career in hedge funding investment, one needs to | | | | of returns and these must be considered by any |
| be well versed with the tricks of the trade. This | | | | shrewd business man. |
| can only be attained through work experience. | | | | Other theorists have asserted that knowledge as |
| Currently, the work experience was obtained | | | | it is can be expanded and it also self generates. |
| through internship at a small hedge fund company | | | | For example, an accountant will start out with |
| at the heart of the City. The work experience | | | | basic knowledge acquired from their learning |
| was an enriching achievement. This is because | | | | institutions. However as time progresses, they |
| there was an opportunity to learn first hand how | | | | become more and more knowledgeable in the |
| hedge fund companies are run. The atmosphere | | | | profession. Therefore one can say that they self |
| was extremely busy since members of staff | | | | generate. According to the human capital theory, |
| were not too many yet the tasks at hand were | | | | knowledge can be transferred from one individual |
| quite enormous. The environment was quite | | | | to another and this has the effect of minimizing |
| stimulating because there were instances when | | | | the level of scarcity of that knowledge. (Marx, |
| efforts would be rewarded there and then. | | | | 2006) |
| However, there were also some times when it | | | | The same theory can be applied to a hedge fund |
| would be bitterly disappointing. | | | | career. One may start out as a simple graduate |
| It was also established that the hedge fund | | | | trainee within a certain company. However with |
| sector requires a lot of networking. Most of the | | | | time, they gain experience about the intricacies of |
| prominent personalities in the firm were deeply | | | | their profession. This is what Smith described as |
| engaged in the hedge fund business. They had | | | | the investment. By gaining work experience, one |
| started out as graduates but made efforts to link | | | | in the hedge fund profession, one is bale to gain |
| themselves to all the right groups in order to gain | | | | competitive advantage over some of their |
| vast experience in the sector. It was also found | | | | competitors. Additionally, one can also improve |
| that investing in the hedge und industry is not as | | | | their ‘human capital' through further education. |
| negative as some people have made it out to be. | | | | In the hedge fund sector, it is important to get |
| The hedge fund industry can act as platform | | | | extra knowledge through such improvements like |
| forimproving people's lives through provision of | | | | doing masters degree in business administration or |
| better products. (Caslin, 2004) | | | | any other related course. This will go a long way |
| It was also found that there were some analysts | | | | in ensuring that one has the right qualifications to |
| who came in as graduates and then worked their | | | | stay ahead of the competitors. |
| way up to become associates. The analysts were | | | | The career objective is to become a competent |
| expected to know much about spreadsheets. | | | | and well trained hedge fund associate. This will |
| They were also expected to be keen and | | | | need excellent grades in the undergraduate |
| hardworking. Their efforts were recognised by | | | | degree. Most reputable institutions usually require |
| the institution hence leading to their promotion. It | | | | top class degrees. Additionally, one needs to have |
| was also found that in order for analysts to do | | | | a good and solid academic background. Certain |
| well in the profession, there was a need for them | | | | institutions usually keep it at a minimum of about |
| to have accounting skills from the beginning. There | | | | 2.1. However, this is not the only thing that my |
| were certain types of accounting certifications | | | | get one to this position academically. Individuals |
| that favoured specific jobs. It was therefore | | | | are expected to have post graduate education |
| necessary to understand which position an | | | | for example an MBA. Academic presentations |
| individual was interested in before they could do a | | | | should also be supported by a wide and diverse |
| certain course. | | | | level of experience within the field. (Caslin, 2004) |
| Work experience also enhances deeper | | | | How to enhance chances of achieving career |
| understanding of the internal dynamics driving the | | | | objectives |
| hedge fund business. It was found that most of | | | | The first thing that is necessary in order to |
| the people who climbed up the ranks happened to | | | | become a competent hedge fund associate is to |
| be those who understood the political, economic | | | | get numerous internship offers. This allows one |
| (both micro economic and macro economic) | | | | to get a feel of the general aspects of the hedge |
| reasons causing customers to make certain | | | | fund industry. Thereafter, there is a need to |
| decisions. Those who did not understand these | | | | engage in more specialised arrangements after |
| variables seemed to be stuck in the middle level | | | | observing which area is most interesting or |
| section. (Asness et al, 2000) | | | | suitable. During internships, it is important to have |
| It was also found that one needed to be very | | | | a mentor who will probably have more experience |
| versatile within that profession. The hedge fund | | | | and will have the ability to teach the tricks of the |
| industry has numerous opportunities for individuals | | | | trade during the process. The internship is also |
| but they have to make sure that they reach their | | | | instrumental because it allows graduate to have |
| targets. One needs to have very good reflexes; | | | | the ability to work in teams. This will give them |
| one is also expected to master their bargaining | | | | access to a wide and diverse pool of knowledge |
| skills. Additionally, there should be more accurate | | | | necessary to succeed in the business. |
| analytical skills and good knowledge of the market | | | | Additionally, by participating in hedge fund |
| conditions. If all these conditions are met through | | | | internship programme, one is able to achieve |
| work experience, then one will be well on their | | | | numerous skills within the field. First of all, they |
| way to achieving their career objectives. | | | | can learn the analytical skills. Additionally, they can |
| Initial career objective at the onset of the degree | | | | also improve on their client handing skills because |
| Before the completion of the degree, the career | | | | they will get a better feel of what it is clients |
| objective considered was; ‘to become a | | | | need. There are also opportunities to learn new |
| competent and well trained Trader at a hedge | | | | ways of doing things. There will also be some |
| fund Company' The reasons why this line was | | | | knowledge on how to strategise. |
| chosen was because of the cat that it was the | | | | Individuals who wish to make it in this career need |
| most typical position within the Hedge fund | | | | to improve their levels of competency through |
| business. Traders carry out some or all of the | | | | associate programmes. (Samuel Bowles & |
| following activities | | | | Herbert Gintis, 1975) One such example is through |
| - equity | | | | an IBD associate programme. In this program, |
| - futures | | | | candidates are given a feel of what all the areas |
| - bond | | | | in the field entail. They are taught about numerous |
| - futures | | | | packages and products and are expected to |
| - option sales | | | | decide on which aspect suits them most. |
| All the following areas need high levels of | | | | Sometimes, the programme offers certain levels |
| commitment from the specific individual. For | | | | of rotation so as to give candidates a choice of |
| example a hedge fund trader handling equity | | | | hat they would want. However, since it is already |
| needs to be well versed with people skills because | | | | known that the career objective is in the hedge |
| they will have to convince consumers about the | | | | fund sector then one needs to put more |
| benefits coming from this investment. On the | | | | emphasis on this during their first year in the |
| other hand, a trader dealing with the incomes will | | | | course. Thereafter, associates are expected to |
| need to have the ability to handle to investments | | | | concentrate on their field of specialty. |
| in volatile economies. Additionally, derivative trading | | | | In the second year of the program, associates |
| requires certain engineering skills as it is quite | | | | are given the chance to work with movers and |
| technical. | | | | shakers of their respective institutions. These are |
| Career objective as a graduate | | | | usually project managers. After interaction with |
| As it can be seen form the lists above, there | | | | such people and in their final year, associates |
| were too many options available for a trader and | | | | within this programme are expected to lead a |
| such a career objective was too broad. There | | | | competitive process within their organisation of |
| was a need to introduce more specifics into this | | | | choice or do other tasks. This will go long way in |
| line. There was also need to make room for | | | | ensuring that they are well prepared for their |
| mobility within the career path a being a trader | | | | career objective |
| is not the final destination for any one's career. | | | | Conclusions |
| (Sherwin Rosen, 1987) This is why the career | | | | Becoming a hedge fund associate is not easy. It |
| objective chosen is to become a proficient | | | | requires a combination of the right academic |
| associate in a hedge fund. | | | | qualifications, the right attitude and lastly the right |
| There are immense possibilities available for | | | | experience and network to survive in this |
| associates. They may start out simply as | | | | industry. (Ceridian UK Ltd, 2007) |
| associates but with time, they can climb the | | | | Reference: |
| corporate ladder to reach the ultimate destination | | | | Alec (2007): Hedge Fund Careers, retrieved from |
| of the head of a hedge fund institution. This is an | | | | Marx, K. (2006): Capital; volume III, pp. 465-6 of |
| example of how one can climb up the ladder as | | | | the International Publishers edition |
| seen below; | | | | Becker, G. (1993): Human Capital: A Theoretical |
| - associate | | | | and Empirical Analysis; University of Chicago Press |
| - vice president | | | | Ceridian UK Ltd. (2007): Human Capital White |
| - executive director | | | | Paper; Journal for Ceridian UK |
| - managing director | | | | Samuel Bowles & Herbert Gintis (1975): The |
| The reason why the position of an associate | | | | Problem with Human Capital Theory-A Marxian |
| within a hedge fund firm was chosen is because | | | | Critique; American Economic Review, 65, 2, pp. |
| there is a possibility for upward mobility. | | | | 74-82 |
| Associates have a wide knowledge base that | | | | Sherwin Rosen (1987): Human capital: The New |
| allows them to grow. Growth can b achieved | | | | Palgrave; A Dictionary of Economics, v. 2, pp. |
| through shifts within various departments found | | | | 681-90 |
| within a certain institution or through the | | | | Seymour W. (2003): Intellectual Capital in |
| familiarisation process. When one works for a | | | | Twenty-First-Century Politics; Ashfield, MA: Paideia |
| certain institution for a long period of time they | | | | Asness, C. et al (2000): Do Hedge Funds Hedge? |
| posses the ability to move up and become better | | | | Journal of Portfolio Management; Vol. 28, No. 1, pp. |
| at what they do. (Seymour, 2003) Associates | | | | 6–19 |
| also have the option of shifting between countries | | | | Caslin, J. (2004): Hedge Funds; British Actuarial |
| or product range offered by different hedge | | | | Journal, Vol. 10, No. 3, pp. |