What is the role of a Financial Analyst in an Hedge Fund?

and also what are the Financial Modeling tools required in this case?

1 Answer(s)


A hedge fund collects money from very rich people, companies, universities, pension companies etc. The hedge fund takes this money collected and invests it in various financial instruments including stocks, bonds, derivatives, commodities, forex etc.

The goal is to make outsized returns for its investors. Hedge funds take on above average risk and hence investors expect above average returns. Top performing hedge funds such as SAC Advisors provide over 30%+ annualized returns.

As a financial analyst your role will be to analyze and recommend investments in the various asset classes. You will most likely allocated to 1 specific asset class for example Equity. In that segment you will be needed to perform various analysis including historical performance, future projections, IRR, risk portfolio, write research reports etc.

The job requires extremely strong analytical and mathematical skills. Ability to work long hours under a lot of stress is also critical.

Most hedge fund analysts spend a lot of time on valuation. The relevant financial modelling techniques are DCF, WACC, CAPM, TVM, IRR, financial ratios etc.