Many different people work for, with, and around hedge funds. The person who organizes the hedge fund and oversees its investment process is the fund manager — often called the portfolio manager or even PM for short.
The fund manager may make all the investment decisions, handling all the trades and research himself, or he may opt to oversee a staff of people who give him advice. A fund manager who relies on other people to work his magic usually has two important types of employees:
Traders: The traders are the people who execute the buy-and-sell decisions. They sit in front of computer screens, connected to other traders all over the world, and they punch in commands and yell in the phones. Traders need to act quickly as news events happen. They have to be alert to the information that comes across their screens, because they’re the people who make things happen with the fund.
Analysts: Traders operate in real time, seeing what’s happening in the market and reacting to all occurrences; analysts take a longer view of the world. They crunch the numbers that companies and governments report, ask the necessary questions, and make projections about the future value of securities.
Because big dollars are involved, many hedge fund investors work closely with outside consultants who advise them on their investment decisions, market for accredited investors, and make sure that they’re meeting their investors’ needs.
Staff members who oversee large institutional accounts — like pensions, foundations, or endowments, for example — rely heavily on outside advisors to ensure that they act appropriately, because these types of accounts hinge on the best interests of those who benefit from the money.
Consultants can also help investors make sound investment decisions, ensure that they follow the law, give advice on the proper structure of their portfolios in order to help them meet their investment objectives, and so on.