Best MBAs For Hedge Fund Wannabes

by John A. Byrne on

If you’re dying to work in a hedge fund, the best schools to get your MBA are New York University’s Stern School of Business, Wharton, Chicago Booth, or Harvard Business School.

At least that’s the result of a back-of-the-envelope analysis by HFObserver, a website that covers the world of hedge funds. HFObserver said to compile its rankings it examined the academic degrees held by more than 4500 professionals hired by hedge fund and alternative investment firms between January and July of 2011. Schools were ranked based on how many senior-level hires in that timeframe were alumni of each institution.

NYU came in first place, followed by No. 2 Wharton, No. 3 Chicago Booth, and No. 4 Harvard. HFObserver said there was a three-way tie for fifth place among Stanford, Northwestern University’s Kellogg School, and Fordham University. The latter, of course, is a big surprise and likely the result of location—being in New York where most hedge funds are headquartered.

Of course, this is just a six-month glimpse at hiring so it would be hard to draw from it solid conclusions about the full hiring patterns of hedge fund firms. Still, it’s an interesting glimpse into a highly lucrative world for many MBA graduates. Hedge funds, along with private equity players, tend to offer the highest paying salaries of any industry today.

“Despite NYU’s overall leadership,” HFOberver reported, “the MBA data show that to become an investment pro your chances may be higher if you stick to the Ivy League.” Nearly all the graduates of second-ranked Wharton and fourth-place HBS in the survey were hired into investment roles. Grads of other programs tended to have a broader range of roles. About 60% of Chicago MBAs, for example, were working as investment professionals. NYU and Fordham grads, meanwhile, were more evenly split between roles in marketing/investor relations, management/operations, and investing.

The survey also found that the MBA degree “is not as prevalent as some might think in the hedge fund/alternatives world: only one third of all hedge fund/alternatives professionals in our survey of recent hires held an MBA degree,” according to HFObserver. “Among investment professionals, the figure rose to 37%. These MBA stats are low compared to other financial services sectors, including banking, asset management and private equity, where the majority of investment professionals nab an MBA on their road to senior brass. About 44.7% of those surveyed had a graduate degree of some kind, with a law degree the most common degree after an MBA, followed by engineering and technology-related degrees.”

The website also ranked undergraduate degree hires in the six-month period it reviewed. The top five? Wharton came in first ahead of a two-way tie between Cornell and NYU. Duke placed fourth, while Stanford was in the fifth spot. On this list, HFObserver also named four schools as “runners up.” There are Princeton, Harvard, Yale, and Syracuse University.

Only 20% of the hires in the survey held undergraduate degrees from one of the top five schools, but again where your degree was stamped appears to have an impact on the kind of job you will get. “A closer look at 2011 senior hires found that 75% of those with Penn/Wharton, Yale, and Harvard undergraduate degrees are working as investment professionals (analyst and portfolio manager), the highest-paid jobs in the industry,” said HFObserver. “About 60% of experienced hires with Princeton, Stanford and Duke degrees are actively investing, as are about half those with degrees from NYU. From there, the numbers drop off steeply in investing roles for graduates of Cornell (25%) and Syracuse (20%), as well as for Brown (33%) and Fordham (5%), which tied for tenth place in our survey.”

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  • Bruce Vann

    Wouldn’t have thought of Stern but I guess that makes sense.

  • Bruins

    Unexpected result. I would have guessed Columbia on top for hedge given its well deserved finance reputation and NYC location.

  • Matty

    Not entirely surprising IMO, as Stern is pretty much geared towards finance and is located near the vast majority of the HF industry.

    Though I do agree that its very odd Columbia isn’t even in the top 5… perhaps as the HF industry is already chock full of Columbia MBAs (which it is), there was simply less of ‘em seeking employment there during the first 7 months of 2011 (as they’re already employed there)? Pretty weak reasoning I suppose.

    If you click on the link to the survery, HFObserver points out in the comments section that Columbia “just missed” the top 5.

  • Hedgeranalyst

    I just bet that the analysis was done by a NYU grad. These things are totally biased 99% of the time.

    @ Matty, at my company 3 of the 5 partners are Columbia MBAs. If I could get in thats exactly what I’d aim for. I totally don’t take seriously those “analyses.”

  • Sangeev_S

    Take this study with a pinch of salt. It depends on methodology of total universe, respondents and how representative it is. Hedge fund people are busy and most don’t bother to participate in the survey.

    I watched a cosmetics TV commercial and the product claims to have skin restoration effect. In small print, it says ’46 women tested in study’. I didn’t rush off buying it.

  • Matty

    @Hedgeranalyst I don’t know if we’re looking at purposely biased (i.e. put together by a Stern grad) but as @Sangeev said there’s almost certainly some faulty methodology/poor representation here.

    In my subjective opinion, Columbia is easily the most represented in the HF industry. The other 7 MBA programs in this survey’s “top 5″ are likely all pretty well-represented in the industry as well, just not necessarily in that order.

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