Starting Your Career at a Hedge Fund

Your Second Year

Chapter 4/5

January 14, 2020

In any industry, the most challenging part of building your career is always the first step and the first decisions made once you start your career. To help, Citadel is launching its first Ultimate Career Guide to provide career advice and checklists to help you prepare for this transition no matter where you are in your career. Through this Guide, we’re offering you an inside look at the advice our associates and recruiters give to candidates and peers.  While this Guide is intended primarily for investment and trading professionals, we believe much of the advice and perspectives provided are of value for professionals in other disciplines, such as software engineers and quantitative researchers. Each week this month we’ll publish a new chapter to this Guide. In this chapter, we explain how you can thrive during your second year at a hedge fund.

Build your contacts

Building a strong network of relationships across the firm prepares you to be a successful collaborator and a strong contributor to your team in the years ahead. Just like any other profession, you must set aside time to get to know those who work alongside you at your firm and also those who work across your industry at other firms. In your second year, it’s important to dedicate time to building up your rolodex and strengthening your network. Developing this list of buy-side, sell-side, and industry contacts will benefit you down the road.

Networking at conferences and other events is a critical part of your career development and an important way to broaden and to deepen your industry expertise. In addition, field research can you help better understand critical dynamics at play in the industry and/or sub-sector you cover.

Develop a strong foundation in risk versus reward

As an associate, your first job is to understand the financial models that drive expectations for the stock price of a company or another security. Another important part of the investment process is the assessment of risk. Therefore, it is essential to develop a solid understanding of risk model frameworks and the specific risk model employed at your firm. For most of us, this will entail simultaneously dusting off those investment textbooks from school and pouring over the documentation of your firm’s risk model. This documentation should include a description of the model structure and the specific risk factors or variables.

Be proactive and ask for an introduction to your firm’s risk management team. They are an important resource to help you understand the firm’s view on risk management. We cannot emphasize enough the benefits of developing a good working relationship with the risk team. They are there to help you build a more robust investment process.

As a result of learning more about the risk model for your firm, you’ll be in a good position to start generating investment ideas. Citadel associate Michael Herman encourages his peers to “set goals for yourself to start generating investment ideas by a specific date – even if your firm has not set this expectation.” When speaking about this process, Herman emphasizes, “It gets you thinking in the right way.”

Establish a presence in meetings

While your first year should be spent getting comfortable voicing your opinion during your team meetings, by the second year, you should strive to be an active participant in internal team meetings, offering original ideas and opinions. Even when you’re not the one speaking, you need to listen. Continue to take the time to observe how other team members conduct themselves and how they solicit ideas from others.

In management meetings, observing is an especially important precursor to asking thoughtful questions in an appropriate manner. After a couple months of attending management meetings, review your participation with your manager. Have a thoughtful conversation about the questions you ask, how you ask them, and how you draw conclusions from the information you receive at those meetings. Todd Barker, head of Surveyor Capital, suggests “spending twice the amount of time preparing for a management meeting compared to how long you expect the meeting to go for.”

Chapter 4 of 5
Your Second Year