MBA versus CFA®

Hedge fund candidates ask us on a regular basis, “What is more valuable in the Hedge Fund industry an MBA or a Certified Financial Analyst (CFA®) designation?”   Although there is not a black and white answer to this question, I have formulated an educated opinion during my last ten years of recruiting in the Hedge Fund industry and as CEO of Private Equity

MBA Alumni Network
The greatest attribute a hedge fund candidate with their MBA brings to a Hedge Fund is the alumni network which comes with that MBA. Hence, the more highly ranked the MBA program the more value the hedge fund candidate brings to the Hedge Fund.  A top 10 and even top 20 MBA program offers their alumni entrance into a very affluent and highly regarded network. This network provides a marketing channel and information source for many Hedge Funds.  

An MBA program outside of the top 20 typically does not bring as strong of a network which decreases the value of the MBA to a fund. There are a few exceptions with MBA programs that possess very strong regional or city specific presence. Their network may be very powerful locally and in some cases equal to that of a top 20 program.  

CFA Designation for Hedge Fund Candidate

The CFA designation represents a strong and broad knowledge of finance.  The designation attests that the holder possesses a sound fundamental knowledge of all investment principals.  All charter holders take and must pass the same three tests creating an unbiased test environment.

The CFA is accepted as the premier designation for the investment community by most hiring managers and investors worldwide. This acceptance gives the CFA designation tremendous creditability. The creditability comes with the candidate to the firm which employees the CFA holder and usually increases the firm’s creditability in the mind of clients and potential investors.

Valuing a CFA versus MBA Accreditation   
In the majority of cases the CFA is more valuable in the Hedge Fund space then an MBA. When referencing a top 20 program or a few select regional MBA programs the comparative value of the two is just about even.  From an academic perspective there are only a select few MBA programs which provide students with a finance and investment foundation as strong as the CFA. A CFA holder brings instant creditability and cachet with them wherever they decide to settle down worldwide.

The creditability that the CFA designation brings is extremely valuable but in some cases a strong alumni network is what a Hedge Fund needs to be successful. If you were to calculate the dollar cost of both paths there is no question that the CFA is much more valuable. If you take into consideration the two years of networking at a top 20 MBA program compared to the countless hours of studying for the CFA after working a 12 hour plus day the MBA would probably be considered the easier path in the minds of anyone who has received their CFA while working.
If you are accepted into a top tier MBA program and you are interested in going, we would recommend your attending the program and starting the CFA while in school.  If you prefer to skip the MBA route, know that receiving your CFA is extremely valuable and will make you a short list candidate on the majority of searches in the Hedge Fund space for investment individuals.

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