Hedge Fund Manager

Written By
Paul Tracy
Updated July 30, 2021

What is a Hedge Fund Manager?

A hedge fund manager is an individual responsible for directing all activities associated with the operation of a hedge fund.

How do Hedge Fund Managers work?

The role of a hedge fund manager is similar to that of a mutual fund manager. Hedge fund managers are primarily responsible for running a hedge fund's daily affairs and for making ongoing investment decisions regarding the composition of the fund's portfolio. A hedge fund manager manages a fund's risk and return, marketing strategy, and capital funding from unit sales.

Why do Hedge Fund Managers matter?

Hedge fund mangers are compensated handsomely, but they also face tremendous pressure because of the high risk of the portfolios that they manage. It is debatable how much influence the actions and skills of a hedge fund manager have on the long run return of the fund's portfolio. The difference between the return of the hedge fund and a predicted rate of return is called "alpha." In other words, alpha is a measure of the skills of a hedge fund manager.

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