Confessions of an anonymous hedge fund manager

In the interview, HFM discusses the industry’s recruitment processes, which he says are becoming increasingly generic. Today, he says, firms get flooded with CVs tailored specifically to the job and institutionalisation of the process means that unusual candidates are often overlooked. “Personally, I think funds need a diversity of experience. The best trade ideas are ones that arise from seeing the world differently from everybody else,” he says.

While he approves of the Securities and Exchange Commission hiring from the industry (“I think the average trader or [portfolio manager], if hired as an SEC investigator, would probably have a list of half a dozen places he or she would immediately raid”), he is not pro Harry Markopolos, the Bernie Madoff whistleblower, leading the regulatory body. “Harry couldn't convince the SEC to do something about Madoff, and that says a lot about the SEC, but it probably also says something about Harry and his communication ability.”

On hedge fund launches this year, he speculates that only established names or those with an established anchor investor will be able to set up, especially as compliance costs skyrocket. Hiring in risk management, he notes, is a growth area.

Another area of frustration for HFM is bankers’ bonuses, which he is surprised are virtually back to peak levels. “And in a bad year, investment bankers and traders still get paid a ton, as though somehow it would be beneath their dignity to earn much less than they did in a prior year,” he says. By contrast, he argues, hedge funds compensation make more sense as assets are often tied up in the fund.

And finally, his advice to those wishing to enter the industry? Work as though you are a professional baseball pitcher: “Your arm is likely to give out at some point. You may be making a ton of money today, but you can get sent down to the minor leagues after a few bad starts. Save your bonuses. And the weird thing is this -- you'll find that once you've built up a nice nest egg, you'll probably be a better investor.”