Hedge Fund Fit Interview – How to Tell Your Story the Right Way

By August 7, 2016Job Search
hedge fund fit interview

How many times in your life have you answered this question: “tell me about your background”? The question has remained the same throughout your career, but your answer has evolved drastically. It should now evolve for your hedge fund fit interview as well.

You have experience in crafting your story. To get to where you are today, you’ve already prepared a fine-tuned script. It details the beginning of your love affair with the business world, your plans to contribute to the world economy, and the accomplishments that set yourself apart.

But using your old script won’t cut it anymore. After dusting it off and reading it over, you realize that the same script wouldn’t sound right to a hedge fund!

That’s because a hedge fund fit interview is fundamentally different from that of investment banking, sell-side research, corporate finance, and consulting. Hedge fund interviewers are looking for a different set of answers from you.

In this article, you’ll learn:

  • What do interviewers look for with the all-important hedge fund fit interview question: “tell me about your background”?
  • How to craft your story differently for the buy side and give a rock-star answer in your hedge fund fit interviews.
  • The most common hedge fund fit interview questions to expect.

The Hedge Fund Fit Interview

hedge fund fit interview

Let’s go over the fit interview you’ve done to get to your current role. Imagine that you are back in that interview room. Tell us your story.

If you’ve read a career guide or gone to a career counselor, they would’ve told you to hit on these points:

  • Make a strong first impression. Tell an interesting story that links where you grew up, why you went to XYZ school, and how you chose your major.
  • Explain how you got interested in finance, consulting, or business in general. Was it a class, a professor, or a club that triggered the spark?
  • Give examples that set you apart. What activities and leadership roles have you taken on?

These were good points to make in an analyst interview for investment banking, consulting, and corporate finance. But they matter a lot less to a hedge fund. Being an interesting, impressionable individual would never hurt your career, but a hedge fund is not looking to hire someone because they are Mr. or Ms. Congeniality.

What a hedge fund wants is someone with a sharp investment acumen, an expertise in an industry or geography, and a strong cultural fit with the team. If you are a hedge fund portfolio manager, you are looking for an analyst with:

Sharp Investment Acumen

Demonstrate that you have the personal qualities of a good analyst. A good hedge fund analyst has a natural curiosity about how businesses work, thinks independently and takes risks.

An Area of Expertise

Show to the fund that you can add value to a hedge fund right away. Your expertise should complement the investment team and help the fund make better investment decisions from day one. For example, if the fund lacks Latin America coverage or isn’t knowledgeable about biotechnology firms, then there is a clear reason to hire someone who can contribute to the research of those areas.

Strong Cultural Fit

You should demonstrate that you know the team and its investment process well and that you fit in with the investment philosophy and culture. Whether the fund is a group of momentum day-traders or long-term value investors, you should know the culture going into the interview and show that you have the same mindset and personality. Funds want to bring on people who’ll be with the team for the long-haul.

These are the 3 important points to consistently hit on as you tell your story.

However, the strength of your story is not in explicitly stating that you are a good investor, have an expertise and fit with the team.

Rather, as you talk about your career trajectory, your goal is for the interviewer to naturally come to these conclusions. Let’s talk about how to best craft your story to achieve this goal.

How to Craft Your Hedge Fund Story

hedge fund fit interview

Now, let’s talk about practical ways to inject these 3 elements into your story. After your interviewer has heard your story, the conclusion should be that this person has the potential to be a good analyst, deep knowledge in a particular area, and a strong fit with the team.

Investment Acumen

As you tell your story, demonstrate that you’ve proactively made decisions at each step along your career path. Why did you choose your major and school? Why did you join your club? Why did you choose your current role over other industries? How did you decide on getting or not getting an MBA or CFA? Explaining your choices demonstrates that you are an independent thinker and a natural decision maker.

Show that you have an inherent passion for business and industry research. What news sources do you read? What are examples of deep research you’ve done at work? Do you have an investment pitch you’ve prepared in your spare time? Have you participated in stock pitch competitions as a way to learn about businesses?

What risks have you taken in life? Not in terms of bungee jumps and skydives, but in terms of life decisions and career choices. Have you stepped up to leadership roles or taken on additional projects despite the added pressure? Did you start a personal investment account to put your own money to work?

Area of Expertise

Pick a few transactions or research pieces you’ve done recently at work. Go through these in detail. Talk about the industry or geographical trends you are seeing that are driving these companies. How did you forecast the company’s revenues, margins, and cash flows? What are the risks to the growth of these businesses?

How often do you talk to the management or analysts of the companies you’ve researched? What questions did you ask them about their businesses? Or what would you ask them if you get the chance to meet them?

What industry or geographically focused books do you read? If you want to invest in technology companies or in luxury retail, what have you read and what did you take away from them?

Cultural Fit

Research each hedge fund in detail before each interview. Google the fund to learn about its history, structure, and team. Understand each person on their investment team, and what their research strengths and weaknesses are. Understand what the fund’s investment philosophy is. Are they short-term oriented or long-term focused? Are they momentum traders or value investors?

Network with someone currently at the fund. Search for the fund’s name in your school alum network and LinkedIn to set up an information call. If you don’t have direct access to someone at the fund, find a friend or mentor who has insights into the same investment process.

Talk about your own investment philosophy and personality. Show that it’s consistent with how the fund invests. If you are interviewing at a value-oriented fund, for example, state that you prefer investments with a long-term time horizon and like to find undervalued businesses.

Common Hedge Fund Fit Interview Questions

hedge fund fit interview

As I talked about in the Hedge Fund Recruiting Roadmap, the first round interview can entirely focus on your fit. The hedge fund interviewer will ask you the same question in multiple ways. It typically starts off with “walking me through your background” but will quickly turn into a Q&A session that goes into specific parts of your story.

But regardless of the question being asked, never lose sight the purpose of your story: to tell the interview that you have good investment acumen, can provide additional expertise to the fund from day one, and fits in well with the team.

Here are the most common questions asked in hedge fund fit interviews. Prepare on how to answer each question to hit on the 3 points:

  • Tell me your story / Walk me through your background.
  • Why did you choose to major in [x]? / Why did you choose to go to [x] school?
  • Why did you choose investment banking / private equity / corporate finance / [x] industry?
  • Why do you want to invest for a living? How do you know you’ll like it?
  • Why do you want to work at a hedge fund over a mutual fund?
  • Why do you want to work at a mutual fund when you can be a hedge fund cowboy?
  • Why do you prefer the buy-side over the sell-side?
  • Do you plan on going to business school / getting a CFA? Why or why not?
  • What are your career goals in the next 5 – 10 years?
  • Do you have a preferred industry?
  • Why our firm?
  • Why would you like to be a generalist and not an industry specialist?
  • Why would you like to be an industry specialist and not a generalist?
  • What questions do you want to ask me?

Each question tackles a specific portion of the 3 points we’ve gone through. After each interview, the fund’s natural conclusion should be that you are a great a hedge fund analyst that would fit extremely well with the team.

That’s it! If you have any questions on a specific hedge fund fit interview question, post a comment below and I’ll get back to you.

Author Kelvin Jiang, CFA

Kelvin Jiang has a decade of investment experience in public equities, private equity, distressed debt, and leveraged finance. His journey spans across Calamos Investments, Thornburg Investment Management, CHS Capital, and J.P. Morgan. Throughout his career, Kelvin has screened and interviewed candidates extensively for the buy side. Kelvin earned an M.B.A. from the Kellogg School of Management and graduated magna cum laude from Columbia University. He is a CFA Charterholder. In his spare time, Kelvin is an avid commentator on NBA trade rumors and Oscar-worthy performances.

More posts by Kelvin Jiang, CFA

Join the discussion 2 Comments

  • SHISHI WU says:

    Why our firm — for questions like this, if this fund is a mid size mutual fund, with no specific investment style (value or growth)., even the performance is just ok…How should I phrase it? I can’t say I like your investment philosophy, or your performance, or your platform, etc…..

    • A key advantage mid-sized funds have is that they are more nimble. They don’t need to go through layers of hierarchy to get an investment into the portfolio. This translates to a higher level of responsibility for the analysts and accelerated trajectory to Senior Analysts / PM.

      The other positive is that mid-sized funds have smaller, close-knit teams. Read the team’s bios and find as much info on the company culture as you can. Talk about your fit with the team’s culture and how well you can work with the PM / Director of Research.

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