By Brian Perry This chapter will look at portfolio management jobs. These are some of the prestigious roles in the finance industry and involve directly managing institutional and retail client portfolios. In addition to following the markets and investing, some portfolio managers might also be responsible for meeting with clients to ascertain their investment goals and constraints and to update them on portfolio performance.
Where the Jobs Are
Jobs as a portfolio manager are usually found at money management firms and hedge funds (including the money management arm of large banks) as well as at "real money" institutions such as sovereign wealth funds, pension funds, and insurance companies. Although many large hedge funds and money management firms are clustered in well-known financial capitals such as New York or London, jobs as a portfolio manager are also available in a variety of other locations. For instance, Kansas City, Denver, Greenwich, Los Angeles and Baltimore are all home to large money management firms and/or hedge funds.
How to Get a Portfolio Manager Job
Most portfolio managers do not start out in that role but rather work their way towards it. Typically, a four-year college degree is a requirement, and graduate degrees are very common. Among portfolio managers, more than perhaps any other finance niche, the Chartered Financial Analyst (CFA) designation is very common. There are a variety of ways to move towards a portfolio manager job, but one of the more frequent is to work as an investment analyst for a number of years learning how to analyze securities. Success as an analyst may then lead to a role as a portfolio manager (if the practitioner is interested in such a move.) Portfolio management positions are generally "destination" jobs and they don't necessarily lead anywhere else. Rather than switching roles, portfolio managers might progress by managing more and more money, or perhaps even by eventually starting their own firm or fund.
Portfolio Manager Jobs
Portfolio managers oversee client portfolios and usually have ultimate responsibility for all aspects of portfolio construction and the client relationship. At some firms, a manager might be responsible for "separate accounts" in which each client has their own account style and holdings. At other firms, the portfolio manager might be responsible for "pooled accounts," such as a mutual fund or hedge fund were the assets of many clients are aggregated and managed as a whole. Another distinction might be the amount of client contact the portfolio manager has. At some firms, the portfolio manager might have a fair amount of client contact, particularly with larger clients. At other firms, the portfolio manager might have very limited contact with clients, instead focusing nearly all of their time on the portfolio. When seeking a role as a portfolio manager, it is important to determine how much client contact might be appealing to you. Then, during the interview process you can determine whether or not your desired level of client contact matches with that which will be required for the role.
Many portfolio managers specialize in a single asset class such as fixed income or equities. Even within these asset classes, some managers are more focused; picture for instance the technology stock mutual fund manager or high-yield bond manager. Individuals that manage these focused funds might come from a research analyst background where they previously focused on analyzing the same types of securities they are now managing. Broader mandates, such as a multi-asset class strategy or a global macro hedge fund, might also be managed by someone with a research analyst background, but in these cases a background as a global investment strategist might also be useful in developing the ability to view various asset classes and determine relative valuations.
As with most finance jobs, many portfolio managers work long hours, and the pressure to perform can be great. In some ways, a portfolio management role can be among the most stressful in finance because each and every day the manager's performance is being compared to their market benchmark or their peers. If the manager underperforms for too long, they are likely to find themselves out of a job. The pay for portfolio managers can make the stress and long hours worth it though, because top-level portfolio managers can earn large salaries and bonuses, as well as prestige and the gratitude of their clients.
Successful portfolio managers enjoy the satisfaction of helping their clients attain their financial goals, as well as large monetary rewards. Particularly on the buy side, gaining a role as a portfolio manager can be the pinnacle of a career. Of course, once having attained that pinnacle, the real challenge starts because the manager must then focus all of their efforts on outperforming the market each and every day. Because of the pressure that brings, the best portfolio managers are those that love the financial markets and would be willing to manage portfolios for free if necessary. (Learn more in Preparing For A Career As A Portfolio Manager.)
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