A hedge fund manager is a professional financial manager responsible for establishing and managing hedge funds. Hedge funds are investment vehicles that provide investors with a range of potential advantages, including the potential for outsized returns, the ability to make private investments, and reduced risk through hedging and diversification.

Hedge fund managers are typically experienced financial professionals, often with years of investment experience and often a degree in finance or economics. They are responsible for investors to meet their objectives by providing portfolio management, conducting research, making investments and monitoring performance. Hedge fund managers also have access to information and resources not available to the public, such as private investment deals, venture capital, and strategic advice.

Hedge fund managers typically earn compensation fees based on performance in addition to fees they charge investors, usually a two-and-twenty structure. This is a fee arrangement under which the hedge fund manager charges two percent on the assets under management and a 20 percent performance fee on any profits that the fund generates for the investors. This setup generally provides a higher compensation to the fund manager in relation to a mutual fund manager, who is usually only entitled to a fee based on the level of assets.

Hedge fund managers typically employ an investment strategy tailored to their fund’s mandate and their own investment philosophy. Strategies used by hedge fund managers include long/short equity, statistical arbitrage, relative value, merger arbitrage, fixed income, distressed debt and algorithmic trading.

Overall, an effective hedge fund manager should be able to successfully develop and execute a strategy, while managing risk, volatility and other market dynamics. They should be able to research and analyze emerging opportunities and have the right temperament and abilities to effectively steer their funds through turbulent economic times.

In summary, a hedge fund manager is a professional investment manager who is responsible for the establishment and management of hedge funds. A hedge fund manager typically specializes in one or more strategies and earns compensation from investors from a two-and-twenty fee structure. Essentials of being a successful hedge fund manager include a working knowledge of the markets, an ability to research and analyze investment opportunities and the temperament to stay focused in volatile markets.