Starting Your Career at a Hedge Fund

Beyond Your Second Year

Chapter 5/5

January 14, 2020

We’re wrapping up the Ultimate Guide for Starting Your Career at a Hedge Fund with a summary of how to set yourself up to thrive, over the course of your career, with two years under your belt. We previously covered what to focus on during your first week, six months, year, and two years at a hedge fund. Based on these tips from our recruiters and associates, we want you to feel confident to aspire to become one of the best and the brightest in the industry. Here’s the pivots you should make after two years at a firm.

Shift your focus from idea generation to idea monetization

In preparation for growth opportunities, associates need to start differentiating between good and bad ideas.  This requires a thorough understanding of risk-reward, positioning and investor sentiment.

Some new questions become part and parcel to your day, including:

  • Is your view differentiated from the market?
  • What is the catalyst path?
  • What should the size of this trade be?
  • When should we make this trade?
  • What gets you to change your mind?

Systematically generating unique insights requires you to develop a deep understanding of an industry, a rich knowledge of historical trends , an array of tools to help you identify mis-pricings, and an entrepreneurial spirit to ensure you’re always looking for new datasets.

The Citadel approach: As associates progress in their career, they are eventually given the opportunity to track a paper portfolio of their investment ideas. This tool is designed to teach associates skills they will need as analysts: portfolio construction, risk management, and attribution of returns. This learning tool is also available for analysts and is often used as an input to scale trade ideas.

Become the expert in your space

As you progress and build your knowledge base in your sector, you want to establish yourself as a resource for your team. Be the person who knows a sub-sector the best. Establish yourself as a resource to your team and, in particular, to any new associates so that they will seek you out when they have a question about your sub-sector or sector. Show that you can connect the dots between events in your sector.

Prepare to step up

Rather than thinking about promotions and the next steps of your career, shift your thinking to the skills and experiences that correlate to gaining more responsibility as you look to become an analyst. Take advantage of the learning opportunities at your firm and maximize the ways you can bring new knowledge and fresh ideas to your team. If you are only focusing on climbing the career ladder and getting a promotion, it will show and will limit your potential to grow.

The Citadel approach: We focus on the skills of individuals instead of titles and rigid promotion guidelines. We tailor development opportunities to the team member.

In addition to thinking about your career and where it has gone, you’ll need to think critically about the direction you want it to go in to ensure your interests and career are still aligned after your second year. To do this, take time for moments of honest self-reflection throughout your career and, especially, as it reaches a new turning point like becoming an analyst. Just as you dissect your successes and failures, evaluate your highlights and lowlights and the lessons you have learned from both extremes.

As you move beyond your second year, continue to show your desire to push yourself outside of your comfort zone. Begin thinking about your ability to manage associates. Eventually, as an analyst or portfolio manager, you will be able to leverage your past experiences to mentor team members and teach associates how to separate signal from noise, generate ideas, and most importantly, generate returns.

Chapter 5 of 5
Beyond Your Second Year