Why Do IGM Candidates Outperform The Markets?

The IGM programme was created by analysing large samples of characteristics of hedge fund managers who consistently generate alpha (outperform the financial markets). Education, career concerns, psychology, and strategies were among the factors considered in these comprehensive studies. We hypothesise that, all else being equal, a manager who is more talented and committed to his or her job will perform better. We use intelligence and education as proxy measures for managerial abilities. Manager career concern is used as a proxy for manager job commitments. The reasoning is that a manager who is under pressure to establish his or her career early on may be willing to put in more effort than a more established manager.

The IGM program's six-level structure aims to demonstrate this logic by serving as a key indicator of candidates' drive and commitment. Based on the most comprehensive data set on manager characteristics from over 4,000 hedge funds between 1994 and 2003, enrolment training followed by an enrolment exam was required to implement. The following factors were gathered: higher education results, work experience, and age. Enrolment training represents work experience, whereas the enrolment exam represents intelligence and education. In addition, candidates who pass the enrolment exam have a more systematic approach and higher risk-adjusted returns, according to our findings.

Within the IGM program, candidates focus on a few strategies that are proven to generate alpha, yet all strategies aim to exploit market inefficiencies. These inefficiencies arise because markets fail to accurately reflect macroeconomic and geopolitical factors. To successfully exploit asset mispricing, candidates integrate informed top-down views with rigorous bottom-up analysis. The findings which were taken into consideration when implementing an economic module and simulation exam, showed a positive correlation between fund excess returns, higher education overall grades and work experience. on the other hand, we found negative correlations between excess returns, fund age and work experience variables. This provides evidence that as majority of IGM candidates fall into the 20-30 years age group and are not exposed to as much work experience or market 'noise', they are more likely to have better performance. The simulation exam helps candidates to exercise non technical abilities such as, time management, communication, critical analysis. These all help to train candidates to work well under pressure and adapt to various market environments. Candidates that pass the simulation exam tend to share very similar capabilities, they are consistent with the career concern an have stronger incentives to work hard, more willing to take risks and consequently tend to have better performance then more established managers.

85% of hedge fund inflows go to larger, more established managers. However, the 15% which is quite significant, goes to smaller portfolio managers. These investors are looking for diversification within their portfolios. These investors can be corporations, accredited investors, hedge fund funds, single & multifamily offices, and high net worth individuals. All investor categories understand that smaller hedge fund managers display patterns of out performance as they can exploit niche opportunities in the market more efficiently than larger firms. IGM candidates are able to meet investors demands due to their understanding of price in a way most fail to comprehend. The intricacies of price as a language that requires candidates to interpret it to a substantial level in a way that will facilitate portfolio managers to acknowledge the intentions of price. Treat price itself as an entity which must first be understood as an isolated concept before attempting to understand its meaning as part of a more complex structure. The modules on psychology, broker relationships, and career guidance cover critical topics that help candidates shape their characteristics to match what investors are looking for. These abilities include the ability to be patient, to tune out noise, to conduct due diligence, and to ask questions. IGM ensures that candidates' outcomes are consistent with a broad interpretation of talent and trains candidates to better understand, design, and implement strategies than others. The programme is an excellent tool for comparing aspiring professionals' knowledge, experience, and exceptional talent, as well as an incentive to work hard. The 1000+ hours of study involve the ideal blend of content and work experience, resulting in a great path to profitability.

To view the possible pathways on completion of the IGM program, visit the career paths page.