Many Want to Enter Industry but New Managers Need

You succeed if you can get market information and analyze it better and faster than anybody else, advised Sameer Bhasin, a research analyst at Okumus Capital LLC, New York, a value-oriented hedge fund firm. In his experience, the goal of an equity hedge fund is to know more than the Street knows, so you need to do your own due diligence.

People in the audience asked what a fund of funds manager looks for. Panelist Aviva Pinto, senior vice president at Lazard Asset Management, New York, listed several key questions. The most important thing is what the manager does, she said: "How do they invest? What is their process?"

Other issues a new manager must be prepared to address, according to Ms. Pinto: What kind of value added does this manager provide compared to other managers? Does the market favor this style? What happens when the market changes? What is the fund's risk tolerance? What are the investment risks and business risks? Can the team handle the back-office operation?

Mr. Rhee described his own experience in developing Treesdale Partners, New York, a bond-focused fund of funds that includes mortgage derivative strategies. "In fixed-income arbitrage, it is very important to have analytics as good as the hedge fund's," he said. "We provide the knowledge base to allocate to fixed income,"

One key part of this knowledge base is marking securities, which his group does themselves. "Mis-marking causes a lot of blowups in this space, so we double-check everything," he explained.

Those MBAs who are not thinking about starting their own hedge fund want to work for one. Several asked about the best way to do this. For them, Mr. O'Connor suggested looking beyond the frequently mentioned job categories.

People tend to think of analyst or portfolio manager jobs, he said, but the industry has many other types of positions, such as back-office personnel, chief financial officer, chief executive or asset allocation person in a family office. "There are lots of different ways people can get into the industry," he said.

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