An Interview with a Portfolio Manager

Tell us about the work you do in your current role?

Currently, I am a portfolio manager in a crypto hedge fund, one of the largest in the field, where we are running a delta neutral strategy. My job is to strategically manage the capital in the fund, which involves making day-to-day trading decisions and staying on top of the news in the crypto space. I focus on studying the research, exploring new opportunities, and assessing new ways of making money. In addition, I manage the junior traders on the desk, who are helping me execute, together with the tech and research teams.
 

Where and in what role did you start your career and how did you get to where you are today? 

In terms of previous experience, I have worked at Morgan Stanley and Bitmex, both of which have helped me navigate my current job effectively, not only in executing trades, but also in understanding all the bottlenecks that can exist. My career started in Croatia, where I was working for a company making an electrical supercar. They're helping Bugatti now and are quite large, but at that time, they were small. I was in the team of about 20 people, working as an electrical engineer. The environment was interesting, but not dynamic enough for me. Fortunately, I got an opportunity to study abroad and some of the professors at the university were in finance, either as traders, or risk managers. That was when my first pivotal decision came about, and I switched to the financial space at the right time. A second, truly transformative decision was undertaking the CQF. The program provided a structured and powerful way to gain the advanced quantitative skills that are essential in today's financial markets, and I'm very grateful for that foundation.
 

What are some of the highlights of working in portfolio management and what are the biggest challenges?

In the crypto space, the market is running 24/7 and it is nothing like other asset classes in terms of dynamics, volatility, and market inefficiencies. So, the biggest challenges are staying up to date with all the information and everything that is happening because market regimes are shifting very quickly. You must filter information efficiently, particularly when the signal to noise ratio is very low. You also need to stay patient and calm. Sleep is optional; that is what I say anytime I interview a junior trader. This is no joke because something may happen at 2am or 3am, or on a Saturday or Sunday night. You need to be vigilant. That's part of the job here and being able to manage stress in this job is very important. Successfully navigating these challenges and identifying opportunities within this dynamic environment is incredibly rewarding.
 

Could you describe what a typical working day looks like for you in your current role?

I'm a big fan of the routine and staying disciplined. So, my day usually consists of getting up between 5:00 to 5:30 am. I have my morning coffee and review the portfolio books that we hold just to make sure that there was no drama overnight. I also catch up on any messages and alerts that may have happened. Then I go for a morning workout and head to the office. Usually, we'll have a strategic briefing in the morning with the CIO and junior traders, where we go through scenarios and expectations for the day and review our plan for what I like to call “defending the portfolios.” Even though we are focused on systematic trading and machines are doing the job, I need our traders to observe all that activity and make sure that things are functioning as expected. Afternoons are usually spent on research and exploring new ways of doing arbitrage on crypto. We also spend time catching up with clients and service providers and discussing tools that we are using. If we need any additional enhancements, we explain it to them then. In the evenings, sometimes I may take clients to dinner; it is important to stay visible and reachable for the people you are working with. Soft skills are as important as hard skills; I would say being able to communicate very well is essential. Over communicate, really, that's what I always tell my team, because if you don't tell me, I don't know.
 

What do you think are the most important skills for professionals in your field to have? 

Regarding the professional skills that people bring in from their universities, analytical thinking is crucial for the research and putting ideas into practice. With all the general tools for coding now, you don't need to be a perfect programmer, but you need to think in a proper mathematical way, so, understanding the basics of quantitative finance and the concepts to apply in each situation is very helpful. People who are strong in physics, applied mathematics, and engineering, and can apply those skills effectively. I think that the CQF is doing an outstanding job on that front by giving that deep mathematical introduction, including, stochastic calculus; with that foundation, you are genuinely equipped with what you need. The CQF provided me with a critical toolkit. In addition, there is now a substantial component of AI/ML in the program, and I wanted to see in my own coursework how I could apply this to algorithmic trading. I decided to do my final project on Bitcoin, so it was a great learning experience, and I discovered some bottlenecks. Ultimately, the knowledge and practical insights gained from the CQF were instrumental in my transition into the front office; I was better prepared with both knowledge and understanding the expectations. I am very appreciative of how the CQF program facilitated this. One of the key balances in this field is to truly understand how to develop a profitable strategy and still be safe from a risk management perspective.
 

Do you think the industry has changed since you started your career, and how do you see it changing in the next few years?

The industry has changed a lot; with crypto, there have been so many ups and downs and being in trading, you need to manage those situations smoothly. On the bright side, we are getting to the stage where crypto trading is not just taken up by individuals and pioneers; these days, institutions are knocking on our door trying to understand the space and explore opportunities in this asset class. Places like BlackRock and other big companies in the US are evaluating crypto and regulation from the SEC and other regulatory agencies around the world is getting better. There is still a lot of work to do in setting up certain rules and regulations, but the news is more positive than negative in the crypto space these days. I believe we are on the cusp of seeing digital assets become a more mainstream and integrated part of the global financial system.
 

What would your advice be to someone starting a career in your field today?

I would say, if you're raising capital for your own investment company, investors care about return, certainly, but they also worry about the risk profile. That's one of the things that up-and-coming traders may forget. They are looking just at the ways to make money, but they don't think about the risk and especially how they're going to defend their capital. Institutional players will require answers from an operational point of view, and are quite focused on safety, privacy, and risk management. They will be thinking about all the good and bad scenarios, and you should be prepared for rigorous questions, a mindset that obviously comes with industry experience. You should also use your analytical and critical skills when you're developing trading strategies and always ask yourself, “What can go wrong?” Stay on top of the news and the latest developments but take care to filter out the noise that is coming in all the time. And finally, regarding your behavior on social media, for example, don't tweet anything- people in crypto will understand. That would be my advice.