Hedge Fund Question of the Week – Winter Edition – No. 1

What is the first question aspiring hedge fund managers should ask themselves?

Answer: Do I want to run a business?

A hedge fund firm cannot last long without solid performance. But equally important is the effective management of firm. And the ultimate responsibility for the firm falls upon the owner – that is, on the hedge fund manager.

A new manager can, and should, hire an experienced professional to run the day-to-day operations of the firm. A good Chief Operating Officer can help insulate the portfolio manager from most of the typical operational tasks and help keep the portfolio manager’s attention on making investment decisions.

But as the owner of the business, there are set of unavoidable issues – from personnel to budgeting and major expenditures – that will fall upon the portfolio manager to decide. And the truth is, those issues can prove time-consuming, vexing and at times down-right annoying. So would-be portfolio managers need to strongly consider the commitment required to be a business owner.