You cannot have missed daily newspaper titles about the tremendous amounts of money finance experts make, and in particular hedge fund managers. “Hedge Funds Manager Wins $25 million in a year”, you might read, and ask yourself – what do I need to do to do the same?
Well, you will need to set up a hedge fund. This is basically an investment partnership headed by a money manager. Hedge Funds dominate certain specialty markets such as trading within derivatives with high-yield ratings, and distressed debt. Further, they are not regulated by the Securities and Exchange Commission, in contrast with mutual funds, for example. This being the case, marketing a hedge fund is also forbidden. In order to secure those investing in them even more, legally these funds cannot accept money from the public, making it an “accredited investor” venue. These investors are assuming a, generally larger risk, than those investing in other funds;besides, they have the opportunity to temporally withdraw a percentage of their investment (on a month, three months or a year).
The other major difference between hedge funds and other investment initiatives is the way that the money manager is paid. He will typically be responsible for investing the clients’ money into different ventures to increase the capital that the company has, i.e. to generate profit. Given he is successful and surpasses, what is known as the “hurdle rate” (a minimum profit from the investment made), he receives an average of 20% percentage of the profit, a major difference from the payment structure designed in mutual funds.
If the idea to work as a hedge fund money manager gets more appealing, you might want to start considering relocating as the top cities for this type of jobs are all around the globe. Hedge funds are growing strong in Tokyo, Zurich, London, Boston, Hong Kong, Dallas, Chicago, New York, and Geneva among others. What you should pay close attention to when looking for your perfect job (Check ¨10 things to do for a perfect job¨ in 2013) is not only the employment conditions themselves, but also the local economy, the cost of living vs the quality of life, and many other factors which might tilt the balance one way or another with time.
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