Interviewing a Hedge Fund Manager
Interviewing a hedge fund manager should not be about running through a list of questions in some prescribed document by an inexperienced analyst, but about thoughtful probing of the manager’s experience, market understanding, risk-taking ability, and above all, strength of character. First as a bookrunner and then as a proprietary trader, I have gone through several rounds of interviews with senior trading managers from Wall Street banks. As a hedge fund manager, I have conducted more than 200 meetings with funds of funds and other investors as well. I would say that most of the questions that are asked can be found in one of the several books written on the industry, and the answers to these questions prove of little or no value. But there are some questions that are truly probing and can shed light on a trader’s intelligence, expertise, and character. Proper due diligence of a hedge fund manager is the fiduciary responsibility of every fund of funds, pension fund, endowment, and family office that has been trusted with an investor’s assets. It can be the difference between investing in a safe, alpha-producing vehicle and losing the entire investment to the next Bernie Madoff.
An investment in a hedge fund manager is the beginning of a relationship that should stand the test of time and market volatility. For both the investor and the manager it is an investment in trust and character of both the parties. This ...