Hedge funds and asset management: the public-markets buy side
The half of the buy side that invests in traded securities rather than whole companies. Asset managers run most of the money; hedge funds pay more, hire more juniors, and keep them less securely.
01what they are
Buy side and sell side1
The buy side raises money from institutions and wealthy individuals and invests it on their behalf, earning management fees, performance fees or both. The sell side earns fees for issuing, selling and trading securities - which is where a banking analyst starts.
Hedge funds: fewer limits, two fees2,3
A hedge fund raises capital from institutional and accredited investors and can short, use derivatives and hold alternative assets. It charges a management fee of about 1-2% of assets and a performance fee of about 10-20% of profits.
Asset managers: one fee, most of the money3,4
Mutual funds and other long-only managers charge a management fee only - about 0.5-1% for active funds - and are open to the public. Europe's asset managers ran a record €33 trillion at the end of 2024, and an estimated €34.4 trillion by September 2025.
Six countries account for nearly 85% of Europe's asset management. The UK is the largest hub, followed by France, Switzerland, Germany, the Netherlands and Italy.
02the strategies that want bankers
Six common strategies2
Mergers & Inquisitions lists long/short equity, investment-grade debt, distressed debt, global macro, merger arbitrage and quant as the main hedge fund strategies.
Deal skills fit fundamental funds2
Many US hedge funds prefer investment banking analysts, particularly those running long/short equity, merger arbitrage, and anything else built on fundamental or deal analysis. A quant or macro fund is looking for something else.
03getting in, and what it is like
Most private equity recruiting is highly structured and runs on-cycle; most hedge fund recruiting is unstructured and off-cycle, so there is no one window to prepare for.
Hedge funds hire more juniors3
Hedge funds hire several dozen new people a year between them; entry-level seats at mutual funds are very limited, and those firms recruit from a broader set of universities.
Hours, pay and security3
In US figures, hedge fund analysts work around 60-70 hours a week for about $200K-600K, and asset management analysts 50-60 hours for about $250K-350K after an MBA. Asset management advances more slowly and is more stable; hedge funds move faster and are less secure.