Managing the market

Applications, internships and employment at Man Investments, one of the largest quoted hedge funds in the world

*Man Investments is one of the largest quoted hedge funds in the world. With more than 1600 employees in 13 countries, their investment decisions can move the markets. Read on to find out how you can gain entry to the mysterious world of hedge funds. *

*What is a hedge fund? *

Hedge funds are privately organised, lightly regulated investment funds which aim to use alternative investment strategies to deliver absolute returns with a low correlation to equity and bond market benchmarks. Traditional long only funds generally measure their performance relative to the market or an index.

Hedge funds are highly reliant on the skill of the fund manager to produce absolute returns. They have the flexibility to use strategies unavailable to traditional asset managers, including unfettered use of short selling, derivatives, speculative positions and leverage.

In most jurisdictions hedge funds are only available to 'accredited investors' such as high net worth individuals and institutions. As such, they are not heavily marketed to the general public.

*What are the different types of hedge funds? *

Hedge funds can be divided into two main categories - single manager and fund of hedge funds (FoHF).

A single manager hedge fund usually focuses on a particular strategy or market to target maximum opportunities for growth. A FoHF invests in a number of underlying single manager hedge funds. Therefore, FoHFs are more diversified than a single manager hedge fund and are the preferred route to hedge fund investment for pension funds and other institutions.

There are a variety of hedge fund managers trading different investment strategies. These managers can be loosely categorized by the following descriptions.

Relative value managers look to exploit relative pricing discrepancies between related financial instruments (ie convertible arbitrage, fixed income arbitrage)

Event driven managers engage in the purchase or sale of securities of companies which are undergoing substantial changes (M&A, restructuring)

Global macro managers take advantage of shifts in macro economic trends

Equity hedged managers take offsetting long and short-positions in equities (may have a net long or short exposure)

Managed futures (CTA's) managers trade in the world-wide futures markets ranging from global financial instruments to tangible assets such as coffee, crude oil and gold

*What is the day to day life of a new joiner (maybe a graduate) at a hedge fund? *

New graduates generally spend between 12 and 18 months rotating around different departments to obtain a deep understanding of Man Investments and the operations of different business areas.

In all rotations, graduates take on live roles and contribute fully to the ongoing tasks of their teams. They are expected to take responsibility and contribute early on, as the work includes both business as usual activities and participating in more strategic initiatives. This mix provides a sound understanding of how the business works fundamentally day to day, as well as how the organisation evolves to remain competitive and a market leader.

Depending on which part of the business they are in, a graduate's daily tasks may be to write an internal research paper to support manager selection, undertake competitor or industry analysis, monitor risk exposures in light of market events, liaise with counterparties, or write programming code to automate and improve a process or piece of analysis.

How do you get in to the job? Is the best way to do an internship? Or to work for an investment bank first?

Man Investments graduate schemes are designed for individuals with no or little work experience and so it is not necessary to work for an investment bank first. While some successful applicants have worked at investment banks, being able to demonstrate a genuine passion for financial services and having a clear idea why you want to work in hedge funds is more important.

Internships are one way to do this and are always valuable experiences to have. However, there are many other ways to demonstrate a genuine passion for a career in the financial services. Having a virtual (or real) trading account, being a member of a finance club or pursuing postgraduate qualifications are alternative ways to impress.

In general many applicants have exceptionally strong academic credentials and a plethora of extra curricular activities. Being able to stand out from the crowd and go the extra mile is required to make a successful application. Be creative!

*How should applicants prepare for interviews? What should they be reading? *

Most of the usual advice applies - do your research! Be clear about why you want to work for a hedge fund and strive to build an understanding of how the asset management industry is organised and where hedge funds fit in.

Keeping up to date with trends and drivers in the market and their impact on various investment strategies is also a good way to show your enthusiasm for finance.

Useful hedge fund news sources are "Hedge Fund Manager Week" and publications such as Absolute Return (focuses on U.S. single manager hedge funds), Investhedge (focuses on FoHFs), Eurohedge (Europe) and Asiahedge (Asia).

The Financial Times publishes a fund management supplement every Monday which often includes commentary on recent market performance, coverage of new products and regulatory developments. The FT Alphaville blog also covers many stories relating to hedge funds and alternative investments.

You can sign up for free daily online hedge fund news with Albourne, HedgeWorld and HedgeWeek.

*What's the pay and what are the hours for someone working in hedge funds? *

Salary is highly competitive and performance driven. Hours depend on the team you are working in but a typical day is 9am - 6pm, not the 18 hour days that allegedly occur in Investment Banking.

*What does the credit crunch mean for hedge funds? How have they been affected? *

The fallout of the fastest credit deterioration over the last five years had worldwide implications across the whole of the asset management industry. Hedge funds were also widely affected with the press centering on hedge fund casualties and write downs, however, there is another side to the credit crunch story.

Some hedge funds made huge gains through shorting sub-prime debt. Paulson & Co, for example, gained over 300% in 2007 and doubled its assets to $20bn through anticipating declines in sub-prime mortgages. This reiterates the ability of hedge funds to perform in a bull as well as a bear market.

*How does Man Investments differ to other hedge funds? How are you a market leader? *

Man Investments is one of the world's largest hedge fund providers employing more than 1,600 people worldwide. Our parent company, Man Group is a member of the FTSE-100. We have worldwide presence and offer opportunities in our offices in London, Switzerland, Chicago, New York, Australia, Singapore, Japan and Dubai.

Recent awards include: European Asset Management firm of the decade 2006 by Financial News. Best provider of managed futures 2006 by Euromoney. Hedge fund of the year 2005 by Funds Europe awards.

We have a culture of accountability reflected in our robust corporate governance and corporate responsibility. We have grown exponentially over the years and Man Investments supports the development of its employees through training and education. Employees are encouraged to take part in social activities such as football, netball and quiz nights. And we get free lunches!

What is the Oxford-Man Institute?

Man Investments and the University of Oxford have established a new interdisciplinary centre at Oxford for the academic study of quantitative finance with a particular focus on alternative investments. The Institute is independent of Man Investments and is run by Oxford University academics. Oxford University intend that the Institute will become the world's leading interdisciplinary institute in quantitative finance.

The Institute is truly interdisciplinary drawing academics and researchers from various faculties (Mathematics, Statistics, Economics, Engineering, the SAID Business School etc) from across the University and has the support of the Vice Chancellor and the heads of the Divisions involved.

It is also standalone, which means that it is not associated with any department; and it has a co-located Man Research Laboratory: Man Investments Oxford. The Institute is a unique and ground-breaking collaboration between one of the world's most respected universities and one of the world's leading financial institutions which focuses on alternative investments. The concept is a first in the world of finance.

*Why is Man Investments involved? *

Man Investments has a long established relationship with Oxford University. While we cannot trace our history back over 800 years as Oxford can, we have been in continuous operation in the City for more than two centuries (225 years to be precise!). Many Oxford graduates have worked for and continue to work for Man Investments, and it is one of many universities worldwide on which we focus our recruiting efforts. Therefore expanding our relationship with Oxford is a logical next step in the development of our relationship.

Also, we believe that any activity that Man Investments can pursue within the area of alternative investments to encourage the creation of cutting edge research, the expansion of excellent teaching and research, and the development of leading academics in this field, ultimately will prove useful to ourselves and our industry.

In addition, we hope that the Institute will provide:

  • greater access to top quantitative researchers from around the world.
  • greater access to new and improved alternative investment and quantitative trading strategies.

increased recruitment potential, due to heightened awareness of Man Investments among the world's best scholars.

  • first mover advantage in creating the first institute of its kind with a world renowned university.

courses tailored specifically for Man Investments employees to keep abreast of recent advances in quantitative finance.

And how does Oxford University benefit?

We want the Institute to come up with big ideas in quantitative finance, and not just undertake incremental research. To this end we have guaranteed Oxford's academic freedom, independence and the right to publish because successful institutions have to have this principle enshrined in their foundation. These guarantees mean that the Institute has the right to pursue curiosity driven research in quantitative finance, and only in this way will the Institute be able to generate the next big ideas.

There are three main benefits for Oxford University: funding, a physical home, access to practitioners at Man Investments:

  • Funding: Man Investments will initially commit £13.75million to the centre.This represents significant funding for Oxford, their third highest donation in any field in recent history and an order of magnitude increase in funding in quantitative finance research
  • Premises: We are providing a physical home for interdisciplinary research into Quantitative Finance.
  • Access to Man's practitioners. Man Investments, with its extensive knowledge across the quantitative finance spectrum within the capital markets, will provide key practitioner insights through working closely with the Institute.

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