In 1901, Alfred Jones was born in Melbourne, Australia. He was born to American parents and moved to the United States at a very young age, graduating from Harvard in 1923 and soon after becoming an American diplomat in the early 1930s. After working in Berlin, Germany, he earned his doctorate in sociology from Columbia University and began working for Fortune magazine in the 1940s. It wasn't until 1948 that Jones was inspired to try managing money. According to Investopedia, “He raised $100,000 and began trying to minimize the risk of holding long-term stock positions by shorting other stocks.” This type of investment is now known as the classic long short equity model. Finally, in 1952, Jones reshaped the structure of his investment structure, transforming it from a general partnership to a limited partnership, increasing the investment fee by 20% for the managing partner. By creating this new model “as the first financial manager to merge short selling, the use of leverage, shared risk through partnership with other investors and a redemption system based on investment performance,” (Investopedia) Jones has earned his place in investment history as the father of hedge funds. When a Fortune magazine article highlighted a mysterious investment that outperformed every mutual fund on the market by double digits in the last year and by even higher digits in the last five years, the hedge fund business was created. In 1968, approximately 140 hedge funds were active. Surprisingly, many funds withdrew from Jones' strategy and chose to institute riskier gimmicks based on long-term leverage instead of focusing on stock selection combined with hedging. These strategies led to large losses in 1969-1970 and between 1973-197... middle of the paper... and 20 compensation is used by the majority of hedge funds today and receives the most criticism due to the 2%. If a $1 billion fund loses money, the hedge fund manager will still pocket $20 million, but will then have to rationalize to investors why the value of their account dropped, while claiming payment of the $20 million of dollars. Overall, hedge fund managers use particular trading operations. strategies and instruments with the specific objective of reducing market risks to produce risk-adjusted returns, consistent with the level of risk desired by investors. This career is very attractive due to its ability and potential to be very profitable. When becoming a hedge fund manager, it is important to know how to consider comparative advantage, a defined investment strategy, have a marketing and sales plan, a risk management strategy and adequate capitalization.