Hedge Funds interview preparation

Questions

100

Traced to a firm

39

Firms

16

Updated

September 2026

Asked at

All firmsMan Group10Balyasny Asset Management7Bridgewater Associates3DED.E. Shaw3Apollo Global Management2KKR2Oaktree Capital Management2Point722SCSquarepoint Capital2ACAQR Capital Management1BGBaupost Group1Coatue Management1HPS Investment Partners1Northern Trust1Viking Global Investors1Wolverine Trading1

Topic

All topicsStrategy taxonomy8Stock pitch10Short selling6Portfolio construction8Risk and drawdown8Performance and alpha7Event-driven and merger arb8Distressed and credit5Fund structure and economics7Financing, NAV and operations6Compliance and research process5Quant and systematic6India and Category III AIFs5Career and fit11

Level

AnyCoreIntermediateHard

Type

AnyTechnicalMarket viewBrainteaserCaseFit

1. 044A fund shows a 2.5 Sharpe over three years. What questions do you ask?Performance and alphaHardsuperdayFund of fundsMulti-manager platforms

   Say this

   I would assume it is either a short sample, a hidden tail risk, or stale marks until proven otherwise. Three years of monthly data is 36 points, which is far too few to distinguish a 2.5 Sharpe from luck, so the questions are all about where the risk went rather than where the return came from.

   Then walk it

   1. Start with the statistics. The standard error on a Sharpe estimate is roughly the square root of one over the number of years, so three years gives an error bar wide enough that a true Sharpe of 1 produces a measured 2.5 reasonably often.
   2. Then look at the shape. Negative skew and high kurtosis are the signature of selling insurance. What are the worst three months, and were they in the sample? If the sample has no stress event in it, the number describes a regime, not a strategy.
   3. Then autocorrelation of monthly returns. If it is materially positive, marks are stale or the book is illiquid and the volatility is understated, which mechanically inflates the ratio.
   4. Then attribution. How much of the return is a factor exposure that happened to pay, how much is carry, and how much is idiosyncratic? A fund that was long momentum and credit spreads in a good period for both has beta, not skill.
   5. Then capacity and concentration. What was the AUM during the period, what is it now, and did the return come from a handful of positions? A 2.5 Sharpe on 200 million does not survive a move to 2 billion.
   6. And the operational questions, which allocators lose money on far more often than they do on strategy: who marks the book, who is the administrator and auditor, how independent is the valuation of the illiquid sleeve, and what are the terms if I want out.

   Where candidates lose it

   Being impressed. The whole question is whether you are sceptical in a structured way. Also, do not just say 'I would ask about risk'. Name the specific diagnostics: sample-size error bars, skew, return autocorrelation, factor attribution and who marks the book. That list is the answer.

   Expect next

   • How many years would you need to be confident?
   • What does positive autocorrelation in monthly returns imply?
   • What operational questions would you ask?
2. 045How do you attribute a fund's P&L?Performance and alphaIntermediatetechnicalMulti-manager platformsRisk management

   Say this

   Split it into the pieces that correspond to decisions someone made. Market, sector, style factor, then idiosyncratic stock selection, then financing and trading costs. The residual after the systematic pieces is the only part that is evidence of skill.

   Then walk it

   1. Start with market: beta-adjusted net exposure times the index return. That is the part you would have earned with no stock selection at all.
   2. Then sector or industry: the net weight in each industry times that industry's return relative to the index. This catches the PM who is really making a sector call and calling it stock picking.
   3. Then style factors from the risk model: growth, value, momentum, size, quality, volatility. Each has a net loading and a factor return, so each has a P&L line.
   4. Then the residual, which is stock selection. Split it long and short, because a book that makes all its money on the long side in a rising market has not demonstrated a short-selling capability and that matters for how much gross it should run.
   5. Then the costs that are frequently ignored: borrow fees, dividends paid on shorts, financing spread on the leverage, and realised trading cost. On a 300 percent gross book these can be well over a hundred basis points a year.
   6. The caveat to state: attribution is model dependent and the pieces do not add up cleanly. There is always an interaction and residual term, factor returns are estimated, and a PM can dispute the classification of a name. So I would use it to ask questions rather than to settle them.

   Where candidates lose it

   Attributing to positions rather than to risks. Listing the top five winners and losers is a P&L report, not an attribution. The point is to isolate whether the money came from decisions the PM is paid for. Remember to include financing and borrow costs; candidates almost always leave them out and they are large on a levered book.

   Expect next

   • What if all the alpha is on the long side?
   • How would you attribute a macro book instead?
   • What are the biggest cost lines on a levered long-short book?
3. 047How would you evaluate a track record you were thinking of allocating to?Performance and alphaHardsuperdayFund of fundsMulti-manager platforms

   Say this

   Work out what generated the return, whether it is repeatable at the size they want to run, and whether the business around it can survive a bad year. Return level is the least interesting thing on the page; the interesting things are attribution, capacity and operations.

   Then walk it

   1. First, decompose. Factor regression on the monthly series plus position-level attribution if they will share it. A track record that is 70 percent explained by long momentum and short volatility is an expensive way to buy two factors.
   2. Second, ask what the sample contains. Which regimes did it live through? A book started in 2019 has seen a crash and a violent recovery; a book started in 2023 has seen one direction. No stress event in the sample means the tail is unmeasured.
   3. Third, concentration of the result. If the top three positions made the whole number over five years, the process claim is much weaker than the return suggests.
   4. Fourth, capacity. What was AUM through the period, how liquid were the positions relative to size, and what does the expected return look like at three times the assets? Almost every disappointing allocation is an asset growth story.
   5. Fifth, the people and the business. Is the performance attributable to one person, what is the team turnover, what is the fee and expense load, and how much of the manager's own money is in the fund?
   6. Sixth, operations, which is where allocators actually lose capital. Independent administrator, audited by someone real, who marks illiquid positions, what are the gates and lock-ups, and what is the history of using them. Then the terms question: if I want out in a bad market, can I get out?

   Where candidates lose it

   Focusing on returns and Sharpe. Those are the inputs to the question, not the answer. The differentiated parts are capacity at future AUM and the operational due diligence, and a candidate who mentions the administrator, the auditor and who marks the book sounds like they have sat in an allocator's seat.

   Expect next

   • What single question would you ask the manager?
   • How would you test capacity?
   • What would make you decline a fund with excellent numbers?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.