Hedge Fund CEO
Deciding how much risk each portfolio manager gets and how big the fund is allowed to be — two levers that everything else is downstream of.
What the job actually is
The person running a hedge fund usually does not run a book. They sit above several portfolio managers who each know their own strategy better than the CEO ever will, and they hold two levers: the allocation of risk between those managers, and the size of the firm. Returns, headlines and bonuses are all downstream of those two decisions.
The structural problem is that the product and the business want opposite things. The product is returns, and returns come from edges that are finite — every strategy has a capacity, a dollar figure beyond which the trades that made it work are no longer available at the size required. The business is assets under management, because that is what fees are charged on. Growing the second reliably destroys the first, and no quarter ever announces that it has happened.
Worse, the money arrives on exactly the wrong schedule. Capital chases the trailing record, so it turns up in size just as the strategy that earned it runs out of room, and it leaves during the drawdown, forcing sales at the worst prices. The only real defence is to refuse it — to soft-close, or hand capital back — which costs fees today in exchange for returns that still exist in three years, and which nobody thanks you for at the time.
The calls that define it
- How much risk each pod gets — the currency portfolio managers actually care about
- When the fund is full, and whether to turn money away or hand it back
- Which strategy is genuinely uncorrelated and which only looks that way in calm markets
- Whether to keep the book that loses money every quiet quarter and pays in the wreck
Answers to investors who can leave, to portfolio managers who can leave faster, and to a regulator; the CEO's own edge is judgement about people and size rather than about markets.
What you'd need to know
The concepts this chair runs on — each one links to a plain-English definition.
Sit in the chair
Reading about a job is the trailer. This simulation makes you do it — free, in the browser, nothing to install and nothing locked.