Byline: Sarah Butcher
Hedge funds represent a new opportunity for graduates interested in a career in financial services.While investment banks have slashed graduate hiring since 2000, hedge funds have been making tentative moves on to the graduate market, in many cases for the first time.
Firms such as Sisu Capital, Odey Asset Management and Financial Risk Management have all advertised vacancies to undergraduates in the UK.
The numbers are not huge. Big investment banks take on more than 100 graduates each per year, and in good times often several hundred; it is unusual for a hedge fund take on more than ten.
Few hedge funds offer structured graduate training programmes; most are small affairs in which training is ad hoc. But for those in the know, hedge funds are a popular place to work.
Yazann Rohami, head of a students' investment club at Cambridge University, said: 'People who are not that familiar with financial markets don't consider working in a hedge fund. But for people a year into a banking job, that is the place to be.'
It's not hard to see why. In recent years, the volatility of financial markets has driven investors to allocate more money to hedge funds.
Hedge funds are largely unregulated and serve either institutions or wealthy individuals. They invest in complex products, using such techniques as hedging and arbitrage to manage risk - classic 'rocket scientist' territory.
As global share and bond prices have declined, money allocated to hedge funds has increased as investors try to offest the falls. Some, but by no means all, hedge funds make big speculative investments that can go badly wrong - or very right.
A report by Hedge Fund Research said global hedge fund assets under management rose 10.6% to $600bn during the first 9 months of 2002.
Yet most undergraduates have limited awareness of hedge funds. Rohami says this is because very few funds participate in the milk round. Although some advertise vacancies through university careers centres, it is often up to students to approach hedge funds directly.
This is where the problems begin. Mike Tiley, head of the careers centre at the London School of Economics, said: 'Hedge funds tend to be rather secretive. They have a certain mystique and students think they are rather sexy, but it is very difficult to find out anything about them.'
A financial careers advisor at a top European business school agreed: 'Because hedge funds are not regulated, it is hard for students to research them. They tend to operate in the shadows.'
One student joined a hedge fund, but was not told the esoteric investment strategy until he had signed a contract, she said.
Joining in a hedge fund can be hard to plan in advance. Unlike investment banks, few funds have established recruitment calendars. Instead, they tend to hire people precisely when they need them, meaning graduates or MBAs must be available as required.
Financial Risk …