Hedge Fund Accountant Job Description

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Hedge fund accountants are a key member of a hedge fund's staff. Their goal is to value the fund's assets, measure ongoing costs, minimize tax consequences and report results to investors. At some funds, they are deeply involved in the investment process because of tax consequences. At other funds, they may analyze investments directly to identify accounting issues.

Valuing Assets

  • Hedge fund accountants spend much of their time valuing the fund's assets. They add up the market values of the fund's different positions (including positions with a negative value) and track this sum on a daily and quarterly basis. This process helps the fund see the results of different strategies and to have a general idea of the fund's health. It also allows the fund's lenders to know how much collateral the fund has available.

Cash Management

  • Hedge funds often have complex cash flow issues. They may own assets that consume or produce a constant stream of cash. They will also borrow money from a variety of sources. Finally, they may need cash in different accounts to act as collateral for their positions. A hedge fund accountant will track where their cash is, where it is going and where it is needed.

Reporting

  • Hedge fund accountants often prepare reports for the fund's investors. These reports show how the fund's assets have performed and what amounts have been earned or lost by the investors. These reports may also show the fund's cash position and a limited balance sheet. However, they do not require the same detail or coverage as internal reports and will often omit sensitive information. This reporting function is the most visible way that hedge fund accountants interact with the fund.

Analyzing Investments

  • Hedge fund accountants may be called upon to analyze assets in which the fund has considered investing. This is a less common case, but it can be an opportunity for a fund accountant to use accounting skills in a new context. This analysis would often involve an investment in a company or asset with a complicated structure. An accountant could be brought in to determine whether the structure led to deceptive financial outcomes or could lead to tax liabilities.

Considerations

  • Hedge fund accounting is one of the most frequently outsourced tasks in hedge funds. The accounting itself is rarely a fund's competitive advantage (this would typically be the trading or analysis skills of its managers), so there is little to lose by having a third party do the work. At the same time, managing an internal accounting team is complex and time-consuming, so outsourcing helps management focus on the rest of its work. This gives accountants a chance to ease into the hedge fund industry by working with accounting firms that do hedge fund work and transitioning directly into fund work from there.

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