As the hedge fund industry continues to grow in leaps and bounds, the structure of the industry is changing. In the past, the vast majority of hedge funds were relatively small operations that were driven by the vision and trading skills of the founders. Now, as hedge funds grow in asset size, hedge fund managers are faced with the challenge of growing their funds beyond the vision and trading abilities of the founders. For many funds, explains hedge fund expert Ari Kiev, the next step in their evolution is to assemble and empower a team of top traders so that the individual traders are maximizing their abilities and contributing to the success of the overall fund. While that might seem simple, in reality its very difficult to achieve. Many hedge fund founders have difficulty ceding trading decisions to underlings and can become particularly intrusive when a position is losing money. In many cases, manager interference worsens the loss and destroys the relationship with the individual trader. This command and control management style at many hedge funds inhibits some traders, with the result that traders may take less risk than is proper. But while Kiev believes empowerment of traders is vital, he recognizes that managers need to maintain a sufficient level of control so that the actions of a single trader or the accumulation of a single position do not threaten the health of the overall organization. Kiev asserts that the delicate balance between empowerment and control is best achieved through a flat organizational structure, in which trading positions, trading decisions, and the goals of the fund are fully visible to all participants, and individual decisions are made in the context of the overall positions and objectives of the hedge fund. Empowerment, transparency, and communication, Kiev believes, will provide a healthy atmosphere for traders to flourish and hedge funds to succeed.
Book Details:
- Author: Ari Kiev
- ISBN: 9781119197775
- Year Published: 2008
- Pages: 205
- BISAC: BUS036000, BUSINESS & ECONOMICS/Investments & Securities / General
About the Book and Topic:
As the hedge fund industry continues to grow in leaps and bounds, the structure of the industry is changing. In the past, the vast majority of hedge funds were relatively small operations that were driven by the vision and trading skills of the founders. Now, as hedge funds grow in asset size, hedge fund managers are faced with the challenge of growing their funds beyond the vision and trading abilities of the founders. For many funds, explains hedge fund expert Ari Kiev, the next step in their evolution is to assemble and empower a team of top traders so that the individual traders are maximizing their abilities and contributing to the success of the overall fund. While that might seem simple, in reality its very difficult to achieve. Many hedge fund founders have difficulty ceding trading decisions to underlings and can become particularly intrusive when a position is losing money. In many cases, manager interference worsens the loss and destroys the relationship with the individual trader. This command and control management style at many hedge funds inhibits some traders, with the result that traders may take less risk than is proper. But while Kiev believes empowerment of traders is vital, he recognizes that managers need to maintain a sufficient level of control so that the actions of a single trader or the accumulation of a single position do not threaten the health of the overall organization. Kiev asserts that the delicate balance between empowerment and control is best achieved through a flat organizational structure, in which trading positions, trading decisions, and the goals of the fund are fully visible to all participants, and individual decisions are made in the context of the overall positions and objectives of the hedge fund. Empowerment, transparency, and communication, Kiev believes, will provide a healthy atmosphere for traders to flourish and hedge funds to succeed.
Hedge funds have exploded in recent years. There are now 10,000 hedge funds and they control almost $2 trillion in assets. Hedge funds because they have wide latitude in their investment choices and because they typically leverage their positions are heavily dependent on the skills of their individual traders. The recent history of hedge funds is filled with examples of individual traders and funds themselves suffering huge losses because of massive bets that went wrong. As the industry gets bigger and bigger, its becoming increasingly important for hedge funds to manage their overall risk and manage the positions of individual traders in order to avoid meltdowns that can threaten the very existence of a fund and the careers of individual traders.
The author is well-known and highly respected in the professional trading community. He works extensively with SAC Capital, one of the largest hedge funds in the world. The author will hire a publicist to promote the book. On prior books, the publicist generated coverage on a number of print and online trading sites, international publications, and appearances on CNBC. Hedge funds have grown enormously in recent years and are predicted to continue to grow in the years ahead a development that will magnify the importance of proper management practices. Explains how to assemble, motivate, and manage a group of traders and to align traders with the vision and goals of the overall hedge fund.
About the Author
Ari Kiev (New York, NY) is a psychiatrist who specializes in performance enhancement and has counseled numerous traders and hedge fund managers on performance-related issues. Kiev has had a distinguished career in psychiatry. He is president of the Social Psychiatry Research Institute and is recognized worldwide for his pioneering work in transcultural psychiatry, suicidology, and psychopharmacology. Kiev has counseled Olympic athletes on how to achieve states of peak performance in athletic competition. In recent years, Kiev has worked with many traders on issues of stress management, goal setting, and performance enhancement. He has worked extensively with Steve Cohens multi-billion dollar SAC Capital Advisors.