the lure of East Asian markets to both the financial services industry and their future employees. However, as many know hedge funds provide another format for the financial services industry. While names such as Bridgewater or BlackRock are no match for the brands of Goldman Sachs, J.P. Morgan or UBS, hedge funds are not only significant but interesting participants in the financial system. Globally, the hedge fund industry is worth $1.9 trillion (U.S. Dollars) and deal with a much wider range of investment and trading activities than a typical investment bank. For students who look for entrepreneurship and excitement in a career, working in a hedge fund should be an option. Ironfire Capital LLC is an equity long-biased and corporategovernance focused investment firm. With offices in Hong Kong and Shenzhen, Ironfire targets undervalued North American listed companies based in China with strong management, corporate governance and operations in large growing markets such as those in East Asia. In the following interview, Ironfire’s founder Dr. Eric Jackson and managing partner Jacky K.Y. Chan shed light on life in the hedge fund industry and how interesting and exciting a career in it can be. Eric Jackson graduated with a B.A. from McGill University in Canada and holds a PhD in Strategic Management and Corporate Government from Columbia University in New York. Previously, Jackson served as Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. Jacky Chan holds a B.A. from the University of Western Ontario and a Masters of Management and Professional Accounting from the University of Toronto. He is a Certified Public Accountant as well as a Chartered Financial Analyst. JL: Hi Eric and Jacky, it is nice to be with you. First, let me start off by asking you, what is a hedge fund? What does a hedge fund do? EJ: A hedge fund format first ap-
peared in the 1950s in the US. As its name implies, the first hedge funds were set up as private partnerships where the investment managers tried to bet on specific stocks he felt were likely to go up over the next several months, while - at the same time - he set up several shorts to protect against the chance that the market would drop. In that way, the partnership was “hedged” to get the value of certain stocks going up while protecting against the broader market dropping. Today, there are many variations of hedge fund strategies from long only, short only, geographic focus, merger arbitrage, futures, or other exotic strategies. JL: What are the qualifications and skills needed for working at a hedge fund? JC: Hedge funds are set up as private partnerships and cannot be invested in by the general public. Only “accredited investors” who have some minimum level of wealth or earn a set salary per year, for example, $200,000 annually, are allowed to invest. Because it isn’t open to the general public, regulators usually do not impose a set of qualifications on the investment managers. They generally allow accredited investors to decide who they want to invest in. If the funds increase value, they generally attract more assets. If not, they don’t and generally wind down. Most hedge fund managers, however, have a finance background and have worked in the hedge fund industry for several years before starting their own firm. Hedge fund managers are usually extremely intelligent, up to date on market trends in the macro-economy, and have strong views on particular positions they take. Most are heavily financially oriented with MBAs, CPAs, and/or CFAs. Some have strong operational skills. Others have strong backgrounds in corporate governance. Many have deep trading experience. Usually they also surround themselves with strong risk management skills. In terms of information technology skills, I would say that there is a
minimum requirement but, after that, it’s not really a differentiator. You have to have a good original investment idea and then a trading strategy to make money from that idea. JL: What are the different roles within a hedge fund? EJ. There is generally a head of a fund, called a President, or Managing Member who oversees all functions in the firm. If it is a larger firm, there’s usually a Chief Investment Officer. He has a team of Portfolio Managers, or ‘PMs’, who oversee various positions in the firm. Those PMs then have research analysts that support them. Traders works with the PMs and CIO. There is usually a COO , Chief Operating Officer, who manages the firm’s growth and handles legal and HR funcitons. There might be a head of risk management and compliance. There might also be a head of marketing and investor relations. They are in charge of keeping existing clients happy and hopefully attracting new clients. As for entry-level positions, hedge funds would generally look for commercially aware people who have an analytical ability and strong academic records. Entry-level analysts do not have a prescribed job per se but they do monitor market data and perform analytical work for the PM. JL: What are the hours like and what would a typical day look like? EJ. Generally, they hours are very long. Global markets never close and there is usually always news breaking after hours affecting one’s positions. Most investment professionals get up early in the morning to catch up on overnight news affecting the global economy or their positions. You might get into work at 7 or 8am to prepare for planning meetings before the markets open. You’re then following the market all day and doing work on future potential position after hours until late. So, it can be a very consuming job. Hedge fund managers generally
39 | Alternative Careers