Morningstar Hedge Fund Analyst Nadia Van Dalen, CFA, is accustomed to providing commentary on hedge fund performance, and many journalists turn to her for insight. For more than two years, she has helped build the new hedge fund department at Morningstar, which provides hedge fund data and research to the industry. Morningstar has approximately 7,000 hedge funds and funds of hedge funds, grouped into 17 categories, in its database.

Although Van Dalen is happy to discuss what hedge fund managers will be facing in the coming year with the credit crunch, she is always careful to base her opinions on observable data. With nearly five years’ experience in regulatory and operational work, she focuses on the practical side of market movements.

Van Dalen started her career as an auditor for the National Futures Association, just after graduating from the University of Wisconsin-Madison. She spent two years auditing and then expanded beyond futures into securities when she took a job as an examiner at the NASD [now FINRA]. Those years merely whetted her appetite for investment research and she quickly turned to the CFA Program to develop a broad understanding of the field.

Hear what Van Dalen has to say about her choice to pursue the CFA charter:

Can you briefly tell us about your career path after you graduated college?

I started working for the National Futures Association as an auditor in January 2001, just after graduating from the University of Wisconsin-Madison. I took the position at NFA because the futures industry had always interested me, as did traveling. Traveling quickly grew tiresome, and I wanted to expand my horizons beyond futures, so in 2003 I took a job as an examiner (auditing broker dealers) at the NASD [now FINRA] to get experience in the securities industry. I joined the hedge fund department at Morningstar in November 2005.

How did you end up in the CFA Program?

I am a big believer in continuous education. I feel that, in order to remain marketable, I must continuously expand my universe of knowledge and diversify my work experiences. Auditing brokers and money managers drove me to learn more about the futures and securities they were trading and portfolio management in general. I decided to make the leap from an operational position to an investment research position, and I knew the way to get there was to earn my CFA charter and to become involved in the CFA society.

Do you think the CFA Program was instrumental in helping you switch careers?

Absolutely. I was looking for a job and a company that leveraged my regulatory and operational experience but would give me access to the world of portfolio management. Morningstar offered such a position. At the time, Morningstar had just launched its hedge fund database and wanted analysts who could understand hedge fund investment strategies as well as the operational issues involved in running a hedge fund. I had just taken Level II, and I had heard that Morningstar was one of the largest employers of CFAs in Chicago, so I knew the company would value my participation in the CFA Program. Furthermore, as part of the interview process, Morningstar requires its equity analyst candidates to take a written examination that tests much of the content of the Level II exam. Because the hedge fund analyst position that I applied for was new, I was required to take the equity analyst exam before I was invited to interview. Studying for Level II perfectly prepared me for my interview examination.

Please briefly describe your position with Morningstar.

My title is hedge fund analyst, but my responsibilities are very broad. They include speaking with hedge fund managers, analyzing hedge fund data, writing reports, speaking to the press, and developing new products.

What are the fun and interesting parts of your job?

The most interesting part of my job is that I am helping to build the hedge fund department at Morningstar. When I started working for Morningstar, our department was brand new, and I was the first hedge fund analyst hired. Now, we have one of the largest and fastest growing databases in the industry, and the media and the hedge fund industry is increasingly recognizing Morningstar as a source of hedge fund data and research.

Do you see earning the CFA designation as critical in your profession?

Yes, very much so. It seems to be more of a standard now rather than a way to distinguish yourself.

Do you see evidence that any of your colleagues agree?

Yes. Many of the analysts at Morningstar are CFA candidates or CFA charterholders. Many of the hedge funds I have spoken to or have visited employ CFA charterholders.

What did you learn from the CFA Program that you would not have learned anyplace else?

The portfolio management concepts in Level III are very applicable to my job. I did not learn these concepts as part of my undergraduate finance degree. I am currently pursuing an MBA at the University of Chicago, which of course offers portfolio management classes. However, these are higher level finance classes, and I am not sure that typical MBA programs offer them.

Can you remember any particular strategies or tactics that got you through the three CFA exams?

The earlier you start studying, the better. For me, spending a few weeks (just before the exam) on practice exams was crucial to passing.

For someone considering the CFA Program, what can you offer as the most compelling reason to pursue the CFA charter?