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6/10/10

So after doing my own research and reading this site I have realized the Asset management is a solid career choice. So I wanted to know what is the usual career path to become a portfolio manger at a asset management firm like Blackrock, Pimco and wellington. Also what is the salary like for a portfolio manger at these places?

Comments (128)

Best Response
7/29/13

People are questioning how to fast track and become a PM. The answer to this is that you shouldnt fast track - that is, unless you want to lose money. Look at the most successful and profitable HF manager in the world - Ray Dalio of Bridgewater Associates. Ray took home $3.9 billion last year and is known as the Steve Jobs of Investing. How did he make his fortune? Ray actually started of from a poor background; his dad was a musician. He warned the bush administry back in the early 90's that a liquidity crisis was coming and he also foresaw the european debt crisis because he calcluted what payments were due and when. Obviously he made a lot of money from this. He believes in understanding how the machine works. How does restructuring work? How does economics work? Hows does politics work? And he believes when you understand how the machine works, you can learn and think how to deal with the problems. Ray Dalio forecasted all the current crisis' because he studied economic history and realised that the current system is unsustainable. He says that the only way to get out of where we currently are is through reform, large debt restructuring and positive fiscal policy. The point I am trying to make is that it takes years to understand how the peices of the puzzle fit together and how the machine works. Overall, I am a working at hedge fund and Ihave been in the markets for six years. Each day I learn something new about the market. I believe that some of my past investment decisions were foolish and that right now, I could be consistent in selecting stocks that generate a positive return. Saying this, do I think I could be a PM? No not at all. I still have much to learn. In 6 years time I will look back on today and think that there is no way I could have been consistent in generating return from my stock selection. My HF manager sleeps 4 hours a night and is IMO the smartest person I will ever know; I know a lot of smart people. My suggestion to you is start saving and investing and reading. Patience is the key as is hard work.

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6/10/10

Unless you know someone or have a big enough trust fund to buy yourself into the position, no bank or AM firm is going to give you a portfolio to manage right out of college. Salary depends on AUM and the firm so for someone entry level it can be anywhere from 75-175 but typically 100k or below.

6/10/10

Main difference between AM and other position is bonus. It's quite smaller.

6/11/10

i work in AM @ JPM/GS/MS in their real estate investing arm. the PMs for our funds are about 50-65 years old. they each have probabyl been with the company for about 15-20 years./

--
"Those who say don't know, and those who know don't say."

9/21/11

You either have to start in AM as an analyst and move up, get sellside experience, and/or go to a top MBA program.

Compensation can vary wildly. I imagine a PM at a place like wellington/pimco/blackrock can clear low seven-figures including bonus.

9/21/11

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

"It is hard to fail, but it is worse never to have tried to succeed."

Theodore Roosevelt

In reply to Something Creative
10/7/11
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

In reply to FutureTrader21
10/7/11
FutureTrader21:
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

Sorry. This is wrong. Pre-MBA roles are typically Research Associate where you support the analysts and PMs. Post-MBA role is Analyst (direct promotion for outstanding RA's is also possible). After a number of years (5-15), you can become a PM. Breaking into the Analyst role is the actually the toughest transition point.

The top MBA programs for access to the Analyst role are (in order): H/S, W, C/C (but they will all give the serious and well-prepared candidate a good shot).

The strongest MBA candidates actually turn out to be those with prior private equity experience, valued for their fundamental due diligence/research experience, valuation skills, and typically very strong background/resume to even be coming from PE. But of course, there are lots of others that successfully make the MBA placement as well.

Comp wise: Research Associates typically don't do very well (less than banking). Analysts do well (similar-to-slightly less than banking but better lifestyle). And of course PMs can do very very well (seven-figures) with a wide distribution depending on the firm, assets, and, of course, investment performance.

In reply to ibleedexcel
10/8/11
ibleedexcel:
FutureTrader21:
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

Sorry. This is wrong. Pre-MBA roles are typically Research Associate where you support the analysts and PMs. Post-MBA role is Analyst (direct promotion for outstanding RA's is also possible). After a number of years (5-15), you can become a PM. Breaking into the Analyst role is the actually the toughest transition point.

The top MBA programs for access to the Analyst role are (in order): H/S, W, C/C (but they will all give the serious and well-prepared candidate a good shot).

The strongest MBA candidates actually turn out to be those with prior private equity experience, valued for their fundamental due diligence/research experience, valuation skills, and typically very strong background/resume to even be coming from PE. But of course, there are lots of others that successfully make the MBA placement as well.

Comp wise: Research Associates typically don't do very well (less than banking). Analysts do well (similar-to-slightly less than banking but better lifestyle). And of course PMs can do very very well (seven-figures) with a wide distribution depending on the firm, assets, and, of course, investment performance.

You're talking equity space. I wasn't.

"It is hard to fail, but it is worse never to have tried to succeed."

Theodore Roosevelt

In reply to Something Creative
10/8/11
Something Creative:
ibleedexcel:
FutureTrader21:
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

Sorry. This is wrong. Pre-MBA roles are typically Research Associate where you support the analysts and PMs. Post-MBA role is Analyst (direct promotion for outstanding RA's is also possible). After a number of years (5-15), you can become a PM. Breaking into the Analyst role is the actually the toughest transition point.

The top MBA programs for access to the Analyst role are (in order): H/S, W, C/C (but they will all give the serious and well-prepared candidate a good shot).

The strongest MBA candidates actually turn out to be those with prior private equity experience, valued for their fundamental due diligence/research experience, valuation skills, and typically very strong background/resume to even be coming from PE. But of course, there are lots of others that successfully make the MBA placement as well.

Comp wise: Research Associates typically don't do very well (less than banking). Analysts do well (similar-to-slightly less than banking but better lifestyle). And of course PMs can do very very well (seven-figures) with a wide distribution depending on the firm, assets, and, of course, investment performance.

You're talking equity space. I wasn't.

OK... Then what were you talking?

10/8/11
In reply to ibleedexcel
10/8/11
ibleedexcel:
Something Creative:
ibleedexcel:
FutureTrader21:
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

Sorry. This is wrong. Pre-MBA roles are typically Research Associate where you support the analysts and PMs. Post-MBA role is Analyst (direct promotion for outstanding RA's is also possible). After a number of years (5-15), you can become a PM. Breaking into the Analyst role is the actually the toughest transition point.

The top MBA programs for access to the Analyst role are (in order): H/S, W, C/C (but they will all give the serious and well-prepared candidate a good shot).

The strongest MBA candidates actually turn out to be those with prior private equity experience, valued for their fundamental due diligence/research experience, valuation skills, and typically very strong background/resume to even be coming from PE. But of course, there are lots of others that successfully make the MBA placement as well.

Comp wise: Research Associates typically don't do very well (less than banking). Analysts do well (similar-to-slightly less than banking but better lifestyle). And of course PMs can do very very well (seven-figures) with a wide distribution depending on the firm, assets, and, of course, investment performance.

You're talking equity space. I wasn't.

OK... Then what were you talking?

OP specifically mentioned pimco and blackrock. Both are fixed income heavy. Pimco for example does not really have research associates or research analysts. They have some credit analysts, but those guys are not in portfolio management. Portfolio Associates there are below the portfolio managers. Hence you do not get hired there as a research associate post mba. you will either go in as a portfolio manager or portfolio associate if you're on the PM track.

"It is hard to fail, but it is worse never to have tried to succeed."

Theodore Roosevelt

In reply to FutureTrader21
10/8/11
FutureTrader21:

So what is it then?

It's both. In equity land, the PM's are guys that have been equity analysts for awhile and then become lead strategists or pm's. Here you would be a research associate->equity analyst-> PM.

In more complex investment funds it doesn't work that way. When you're a portfolio manager focusing on derivatives, currency, fixed income, etc, you are typically not going to be an equity analyst or a research associate before because your skill set is really not relevant. You would be some type of associate or equivalent and then become a PM or come in as a PM or associate level via b-school. It's going to depend on your previous experience.

"It is hard to fail, but it is worse never to have tried to succeed."

Theodore Roosevelt

10/8/11

It's very difficult to generalize as people have pointed out. Some fixed income teams will have a track that looks a lot like equities, others won't. I happen to think the job is overrated, but good luck to you.

11/20/11

what are teh pre-requisits coming out of undergrad/masters degree? What qualities do they look for?

7/29/13

so how much do post-mba analysts make at an asset management firm?

7/29/13

mutual fund ppl, in my limit experience, generally don't go to hf. the pay is worse pretty much across the board, but specifically your earnings arent high for the first 5-7 years but then can take off to $1mm or so if you're good.

CFA is a long, arduous process, just be aware.

7/29/13

CFA is garbage. My admin has one. All it shows is that you can study, but i have met too many idiots with the designation, so I am biased against it. It would help getting a job at some places, but not at our shop (hedge fund).

As far as career path, i would say go to an investment bank and get on the prop desk. then try to go to a hedge fund. However, the take on a prop desk can be as high as 15% of p&l, but for a hedge fund it is more like 8% of your p&l assuming you are not the boss. Banks are usually less of micro-managers. If you want to get rich quick, go to a prop desk where they have poor risk controls or trade a product where you are the sole person determining inputs for mark-to-market models (rate swaps are a good choice). Then you can take big bets and get paid for it.
As far as i banking versus trading, trading makes a shitload more money. An associate can expect 350 in a good year in banking, but if you crush it in trading the sky is the limit because your pay is performance based. I have friends under 26 wihtout MBAs pulling in over 1mn USD a year.
The hours are better in trading as well.

In reply to CaptainJapan
7/29/13

If it's such a joke,

Then why are most PM's (hedge funds and mutual funds) lobbied to have the distinction? (provided you're not a legend on the street) I disagree completely.

I have two levels of CFA under my belt and I work in ops at a hedge fund. I know PM's who would kill to have two levels in their resume repertoire or their staff's to enhance their credibility and capabilities to current and potential clients.

The fact is people are absolutely in love with financial certifications and designations. (including MBA programs)

DkrCap makes some good points but he certainly sounds a little anti-establishment, somewhat typical of agressive traders vs. I-bankers.lol

"Cut the burger into thirds, place it on the fries, roll one up homey..." - Epic Meal Time

7/29/13

"If you want to get rich quick, go to a prop desk where they have poor risk controls or trade a product where you are the sole person determining inputs for mark-to-market models (rate swaps are a good choice). Then you can take big bets and get paid for it."

Aggressive suggestion. do you really think rate traders can just make up whatever they want and mark their books accordingly? come work at a bank sometime.

7/29/13

CFA is a de facto requirement in money management. While the value is questionable in banking, it is held by more and more junior HF staff. A friend recently got a job that only a MBA would have qualified him for with his CFA designation... and the fact that he was a trader. I am finishing my MBA, and not thinking about buy side, so am questioning the value of an additional CFA, however IB experience is a solid in towards HF's.

Buy side compensation can be great, but in smaller cities. Doesn't really scale as much into bigger cities, but is still pretty good for a pretty good lifestyle. Depends on what you want. Not all bankers make 8 figures all the time.

Metals & Mining I-Banker

In reply to DiscoZ
7/29/13

Asset Management and IB are two distinct and very different areas. The CFA distinction falls primarily under the Asset Mgmt umbrella.

IB gets you into anywhere. Let's be clear. S&T will not always get you into the asset management side of finance but any trader opportunity at a HF, BB is almost a given with a good resume'.

Osmurad, your friend looks like he is very indecisive. Are you saying that he was a trader, obtained his CFA and then went on to grad school? That sounds pretty left field...

I mean honestly, this guy sounded like he was unsure as to which direction he wanted to go in b/c his experience almost signfies that he has no idea what he want(s)/ wanted to do.

"Cut the burger into thirds, place it on the fries, roll one up homey..." - Epic Meal Time

7/29/13

vadremc:

Asset Management is not on the banking side....

7/29/13

Please pardon me,

Everyone please replace the word "banking" in the statment aforementioned by myself, with the word "finance" as kindly pointed out to me by Tirekicker, our online diction expert. lol. Thx.

"Cut the burger into thirds, place it on the fries, roll one up homey..." - Epic Meal Time

7/29/13

So here is what I have inferred from this thread. The CFA designation is basically now a requirement or at least quite helpful in advancing in Asset Management. I guess the reason I question this is, even though many people on here are gunning for the ibanking positions at the analyst level, many, many of these analysts seem to want exit opps in hedge funds. Then would you really not even consider enrolling in the program? I know it is a serious comittment, but I think that I could probably have level one passed by the time I graduated, and actually obtaining an analyst position at a bank won't necessarily happen for me. If long term goals include fund management, would enrolling in the designation:

A) Hurt my chances at banking because CFA is seen as completely unnecessary for banking, and thus hurt my chances in fund management because many of these jobs go to ex-bankers

or

B)Be a source for learning the fundamentals of what I think to be a long term career goal?

I mean I have read many conflicting statements from inexeperienced people such a myself, but I can't really see that completing at least level one while I have little committments would be a bad thing.

Also, to counter the staement that idiots hold the designation...Idiots hold most designations and positions...from CFA, CA, CPA,CBV ibankers...presidents. That doesn't necessarily mean they hold no value.

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7/29/13

CFA is rather useless for core buy-side jobs, ie analyst/PM at MF or HFs.

However, if you are in any kind of client facing role a CFA is a useful desig to have. For example, in sell-side research, sales, client servicing/market at buy-side, consultants/fund of funds, or similar roles, pretty much ary one has a CFA or is studying to get one.

7/29/13

I'd say its a two step process. As it is, it's tough to make it on the buy side - it can be just as tough as the sell side and you're on a shorter string because you're all about P/L. You may be able to swing it because of the quality of your MBA, so it could be ok for you.

7/29/13

Incredibly unlikely.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

7/29/13

I figured that, but according to the job requirements I have the necessary experience.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

7/29/13

Yea, you might meet the bare minimum they published as requirements but...I would keep looking.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

7/29/13

I am def still looking for other stuff. But, I actually met 90% of the additional requirements, only one I didnt meet was one that was impossible to meet unless you work there. Like i said before it was hard to tell what the job actually was, at times it looked like an analyst position other times it looked like a portfolio manager position.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

7/29/13

This isn't for BNY Mellon is it?

If I had asked people what they wanted, they would have said faster horses - Henry Ford

7/29/13

No.

Aside from the job title and a few of the responsibilities it is honestly much closer to an analyst job than anything else. Even the pay is sub par compared to IB.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

7/29/13
7/29/13

You're a financial advisor, sorry for my candor but I fail to believe that a financial advising career, let alone a limited one (you're 24), would prep you to be a PM. Either you have delusions of grandeur regarding your experience and background or the position is not real.

Maybe 10-15 year of advising but at the most you maybe have 6...

7/29/13

I am not an advisor, I work for a group of advisors building and actively managing their client portfolios. I was confused when I first saw the job posting as it designated it was a portfolio manager position. Upon reading the job description it was very similar to what I do now with some aditional people managing requirements. I proceeded to contact the HR department about the posting. After speaking to HR I felt that I met or exceeded about 90% of the advanced requirements, only lacking in the internal company understandings. Which HR said was to be expected from outside canidates. I am in no way banking on this application or am I having delusions of grandeur.

Also, PIE no it is not a non existiant former hedge fund.

On a rather strange and odd side note the Galleon Group linkedin page is still opperational

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

7/29/13

I really don't think managing a portfolio is that complicated. Read Benjamin Graham's work and/or steal stock picks from really intelligent buy and hold investors, and you're pretty much good to go. It might sound really simple, but I've been producing market beating returns for the last 3 years now. Maybe I'm lucky, but at this point in time, I see no reason to alter my current strategy.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

In reply to mike55555
7/29/13
mike55555:

Read Benjamin Graham's work and/or steal stock picks from really intelligent buy and hold investors, and you're pretty much good to go.

Not sure about that bro.

People like Coldplay and voted for the Nazis, you can't trust people Jeremy

In reply to mike55555
7/29/13
mike55555:

I really don't think managing a portfolio is that complicated. Read Benjamin Graham's work and/or steal stock picks from really intelligent buy and hold investors, and you're pretty much good to go. It might sound really simple, but I've been producing market beating returns for the last 3 years now. Maybe I'm lucky, but at this point in time, I see no reason to alter my current strategy.

You really didn't just say "don't think managing a portfolio is that complicated" so when someone is compensated $4 billion a year to do their job...are you implying there job is not that difficult....that anyone basically anyone who could "steal stock picks" would be successful.. Equities aren't the only thing traded...

This is why your a senior in hs or a freshman in college, I can't remember....

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

7/29/13

Mike55555 is technically correct, it could be relatively simple. But, depends on what you are managing it could be extremely complex. Considering alot of portfolios have pre determined inveting guidelines and/or can only invest in certian areas i.e. bonds, equities, commodities.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

7/29/13

Yeah I expected some hate on that comment, because if most people thought the way I do, the financial services industry would be a lot smaller than it is today. All I'm trying to say is that my investment philosophy is pretty simple, and based on past results, I have no reason to pay someone else to manage my money. There's guys with decades of experience and PHD's in finance who don't seem to be able to beat the market. Investing is a field where more knowledge, doesn't necessarily correlate to better results. In my personal opinion, based on past results, simplicity is genius.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

In reply to mike55555
7/29/13

mike55555:
Yeah I expected some hate on that comment, because if most people thought the way I do, the financial services industry would be a lot smaller than it is today. All I'm trying to say is that my investment philosophy is pretty simple, and based on past results, I have no reason to pay someone else to manage my money. There's guys with decades of experience and PHD's in finance who don't seem to be able to beat the market. Investing is a field where more knowledge, doesn't necessarily correlate to better results. In my personal opinion, based on past results, simplicity is genius.

I'm guessing everyone in the financial services industry thinks the way you do.

looking for that pick-me-up to power through an all-nighter?
In reply to LIBOR
7/29/13
mike55555:

Yeah I expected some hate on that comment, because if most people thought the way I do, the financial services industry would be a lot smaller than it is today. All I'm trying to say is that my investment philosophy is pretty simple, and based on past results, I have no reason to pay someone else to manage my money. There's guys with decades of experience and PHD's in finance who don't seem to be able to beat the market. Investing is a field where more knowledge, doesn't necessarily correlate to better results. In my personal opinion, based on past results, simplicity is genius.

I'm guessing everyone in the financial services industry thinks the way you do.

No, the top performers are a lot smarter than me, hence me stealing their ideas...

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

7/29/13

I agree with Mike in that this shit is a lot easier than most people think, but at the same time it's really complicated. I think a ton of firms/people overcomplicate investing and would actually do better by doing a simpler strategy that made common sense.

Finance is like golf in a lot of ways. On the surface it's simple, put the ball in the hole; but there's also a ton of nuance to it. Some people overthink it and suck, others just grip it and rip it and play well. To be the best, you gotta have a balance of both, be able to do the really complicated stuff but at the same recognize when it's unnecessary. The athletic person isn't always the best golfer, just like the most intelligent person isn't always the best investor.

I could simplify my whole portfolio into like 5 or so "main trades" (i.e. the "alternative beta" generated by benchmarking to something unique as opposed to the S&P 500 or some other such basic index). Then, you just generate alpha on top of this alternative beta by maximizing risk/return relative to that custom benchmark (i.e. being a good stock picker, employing optimum options strategies, etc.). Still, if I told you the 5 "main trades", and you held them for the next 10 years, you'll rape the market because this alternative beta strategy is mispriced (and I'll generate alpha on that, and make even more still, lol).

Consultant to a Fortune 50 Company

7/29/13

blackfinancier, aren't you an 18 yr old freshman as well? not trying to be an ass. justsaying

In reply to alreadyrich
7/29/13
alreadyrich:

blackfinancier, aren't you an 18 yr old freshman as well? not trying to be an ass. justsaying

I'm but I don't I try to use some logic when I think

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

7/29/13

Blackfinancier, you do realize that there are hedge fund managers that base their strategy off of animal migratory patterns in Africa and all sorts of other crazy shit. I would argue that the logic behind an investment strategy is far less marketable than the results it produced. When you produce results, people are willing to believe almost anything.

BTW, I can't really think of a reason why stealing the smartest ideas from the smartest people is not logical.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

7/29/13

I highly doubt that you are qualified to be a true PM. Take a look at CFA Level 1 materials on portfolio management and tell me if you comprehend a lot of the stuff in there.

In reply to rothyman
7/29/13
rothyman:

I highly doubt that you are qualified to be a true PM. Take a look at CFA Level 1 materials on portfolio management and tell me if you comprehend a lot of the stuff in there.

I'm a college freshman, with zero CFA preparation. Of course, I'm not going to comprehend most of it.

My point is that investing is a result driven business. If I had a million dollars to start a hedge fund and generate an average annual return in excess of 20% over 5 years, I don't think I would have any problems convincing investors to put money in my fund. Don't forget my "simplicity is genius" approach can very quickly turn into "At XYZ Investments, Inc. we are not concerned with finding the next big thing, but instead finding quality companies trading at a discount to their intrinsic value, due to irrational market behavior," when presenting to potential investors.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

In reply to mike55555
7/29/13
mike55555:
rothyman:

I highly doubt that you are qualified to be a true PM. Take a look at CFA Level 1 materials on portfolio management and tell me if you comprehend a lot of the stuff in there.

I'm a college freshman, with zero CFA preparation. Of course, I'm not going to comprehend most of it.

My point is that investing is a result driven business. If I had a million dollars to start a hedge fund and generate an average annual return in excess of 20% over 5 years, I don't think I would have any problems convincing investors to put money in my fund. Don't forget my "simplicity is genius" approach can very quickly turn into "At XYZ Investments, Inc. we are not concerned with finding the next big thing, but instead finding quality companies trading at a discount to their intrinsic value, due to irrational market behavior," when presenting to potential investors.

I understand you've read some books and upon finishing them you get this 'ah hah!' type of moment where you realize you can be successful in the industry; and chances are you can.

But don't be fooled.. a lot of background work goes into analyst positions let alone a PM POSITION. What you stated above EVERYONE knows. If we could all make money like this, we would all be rich.

And everything is a result driven business.. not just finance.

If you can generate a 20% return and have proof of it over 5 years then that's great.. but doing it and thinking you can do it are two totally different animals in the investment world.

And you wouldn't have any problems convincing investors to put money into your fund? First of all, I'' take a wild guess and say that you don't have 1 million dollars of disposal money to start a fund, and even if you did, marketing it is not easy task either, not to mention the costs of doing that. And don't even get me started on the regulations you must know and the licenses you must hold, etc.

I really do respect the enthusiasm, but start with the basics now. Since you are so young if you do this, you'll be lightyears ahead of your peers in no time.

7/29/13

I'm reading books, studying hard, but above all else the results of my portfolio are the most important part of my long-term plan. In all honesty, if things keep going the way they're going, in less than 10 years, I won't need anyone else's opinion to get my ideas off the ground. I've already produced market CRUSHING returns over the last three years, with a series of very simple investment strategies. In my eyes producing compounded annual returns in excess of 20% over a 5 year period is not very far fetched.

Think big or go home. Excuse me for being a non-target with a sense of entitlement, but in my eyes scoring an analyst position with an hourly wage of less than $30/hr is not the epitome of success. The epitome of success is not having your boss take a shit in your mouth every time you go to work.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

In reply to mike55555
7/29/13
mike55555:

but in my eyes scoring an analyst position with an hourly wage of less than $30/hr is not the epitome of success.

I don't think anyone on here would say being an analyst is the epitome of success, not even close. It's a stepping stone.

In reply to JeffSkilling
7/29/13
JeffSkilling:
mike55555:

but in my eyes scoring an analyst position with an hourly wage of less than $30/hr is not the epitome of success.

I don't think anyone on here would say being an analyst is the epitome of success, not even close. It's a stepping stone.

That may be true, but I have my morals and I don't feel like having anyone take a shit in my mouth.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

In reply to mike55555
7/29/13
mike55555:

I'm reading books, studying hard, but above all else the results of my portfolio are the most important part of my long-term plan. In all honesty, if things keep going the way they're going, in less than 10 years, I won't need anyone else's opinion to get my ideas off the ground. I've already produced market CRUSHING returns over the last three years, with a series of very simple investment strategies. In my eyes producing compounded annual returns in excess of 20% over a 5 year period is not very far fetched.

Think big or go home. Excuse me for being a non-target with a sense of entitlement, but in my eyes scoring an analyst position with an hourly wage of less than $30/hr is not the epitome of success. The epitome of success is not having your boss take a shit in your mouth every time you go to work.

Ha look man, no one is trying to bring you down or shit in your mouth. I'm being pretty polite and upfront with you considering I come from a non-target as well. And if you carry this attitude into your career people ARE going to shit in your mouth. People who have been in the industry much longer than you and have seen much more.

And honestly yes you don't need anyone's opinions but I'm still wondering why you came here to ask for it. Sorry if you don't like the answer, but no matter how smart and skilled you are, there are going to be times when you are humbled and brought down to a realistic level.

Hating on an analyst position isn't going to get you anywhere either. Some of the greatest investors today started as analysts and put in their time and networked up the top.

We could go back and forth all day, but when it comes down to it listening and being humble is a huge aspect of becoming successful.

In reply to mike55555
7/29/13
mike55555:

I've already produced market CRUSHING returns over the last three years, with a series of very simple investment strategies. In my eyes producing compounded annual returns in excess of 20% over a 5 year period is not very far fetched.

no offence dude but it wasnt very hard to get great returns in the past couple years.. if you had started off in 2005 and maintained the same results through 2008 then thats a completely different story.. but stocks were hit hard during the crisis (as we all know) and for most of them the only way to go was up. its great that you are getting yourself involved in the market at an early point in life but dont let it all go to your head. good luck

7/29/13

Sorry for going on a drunken rant on the analyst position. It's just that the job I work is pretty much irrelevant to my long-term plan. Most people think of wealth creation in terms of the job they work, but I see a much different picture. For me it boils down to: 80% Equities and 20% LEAPS. Of course you need to be a good stock picker, or good at stealing stock picks from the right people for that to work out.

I do realize I've had a string of success in a bull market, which is not that uncommon, but I haven't just made money, I literally RAPED the market. I guess I'm either really good at picking stocks, or I have a horseshoe up my ass, either way, I'm loving every minute of it and I don't think being a portfolio manager necessarily has to be a complicated job.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

7/29/13

Mike, best of luck...but wisdom is crucial to long term success

In my own experience in finance, the more you learn about markets/investing/etc, the more you realize you know next to nothing, and many times success can be attributed to luck.

I like the adage, "the harder I work, the luckier I get." And the other thing to keep in mind is the relative size of your investments. The more money you manage, it generally becomes more and more difficult to produce returns....it becomes more challenging to find enough attractive opportunities to allocate your capital in trades, etc. Although its not as sexy, think about PIMCO's total return fund...managing $250B....ALL of that money has to be put to use to create a return, otherwise it is a drag on the portfolio's performance....big picture Mike, big picture

7/29/13

Mike: There is a very small group of people who are naturally good at picking stocks. Statistics says that there are bound to be people who have long winning streaks for no reason. Most money managers think of themselves as superior stock pickers. Most underperform the market on risk adjusted basis. If I were to bet I would say you were lucky and not smart - it could be that you are one of those rare individuals that pick stocks naturally - however I highly doubt it - from a pure probability stand point not having met you in person. It is pointless to argue whether you are good or not until you have a multi year track record but even then it could be simple luck

7/29/13

On average 5 years. 3 years, as fastest. Analyst that will be promoted to PM would need to have had analyst role (analyzing securities in many industries, broad knowledge of the market etc.) while also having pre-experience in managing portfolio. (e.g. mock portfolio or doing some roles that PM would do for example, sending buy/sell orders, selecting stocks into portfolio etc.) In addition, analyst would need to have the license to be a PM (for example, may country.) So, as an analyst, you would need to equip the Fund Manager license in order to be the licensed PM.

How long for one person to be promoted to PM depends on many things. But, it usually comes down to 1) enough experience and how well your boss can see your potential to be a good fund manager 2) skills (analytical skills, presentation skill, stress handling etc. 3) A degree (yes, CFA would help.)

7/29/13

At my shop you become Associate PM and work under a Sr. PM first to gain experience. Then the Jr. level PMs either become co-PM of that fund or lead PM of a new smaller product in order to build a track record to manage larger sums of money.

7/29/13

Would be good if someone could shed some light regarding this. Interested to know more too.

7/29/13

1. IB
2. Depends, if you're working at some global macro HF, then yes trader would be better. If you're working at some fundamental value or arbitrage shop, then analyst.
3. No
4. Math is fine, just take some accounting classes to supplement.

7/29/13

I am an equities analyst in a Global Hedge fund (dont want to disclose). If your goal is to become a portfolio manager well than you need to know just about everything about finance and have a huge general knowledge in general - history, philosophy, art, sport, lifestyle. Nonetheless, to build these skills it takes an enormous amount of reading and life skills. Generally from day one on the job, it will probably take about 20 years until you become a PM; a good one anyway. As you can imagine, this is because of the knowledge base you need to build and the understanding that you need to build across every market segment and industry - your the one making the calls for investments.

Anyway, to answer your questions:

1. Definately HF. If you work at an IB, you are on the sell-side of the business and basically all day your just modelling. In comparison, if you work at a HF basically you build your understanding on business fundamentals. Also working at a HF it is easier to transfer across to PE in my opinion because you are looking more at the business drivers and challenges in comparison to spreadsheets. Nonetheless, this is highly subjective.
2. Analyst. Why? a trader just trades on volaility - he composes a totally different skill set to an analyst. If you want to be a PM, you need to know how to analyse fundamentals, economics, business etc. Anyone can execute trades and if you work under a PM at a HF, he will train you in how to execute trades. Trading is more day to day. Where at hedge funds, and as a PM, your building a position based on your analysis.
3. No
4. Maths majors definately help. Id be looking at getting into finance and maths at university if you can.

7/29/13

(1) As a general rule of thumb, you should be starting close to where you would like to end up, at least as close as possible. The primary benefits of banking are two-fold: (A) You keep your finance career options open until you can make a more informed decision, and (B) The all-important (at least to a lot of monkeys on this forum) PE option. If you know for certain that you want to be a Public Markets PM, then getting legitimate investment analysis experience out of undergraduate could only really help you. It doesn't make sense to subject your body or mind to the physical ailments and mental deterioration of sell side work. In a BB IBD program, you're being paid to give up ages 23 and 24, and to be a modeling monkey. At a good (and I do stress the term good) buy side shop, you're being paid to learn, and become a better thinker.

(2) This is quite firm-dependent. As a trader at a place like Bridgewater, you'll be doing execution trading only, i.e., the PM sends you a list of securities to buy and sell, and you do your best to optimize that process. It's not necessarily bad experience, and execution traders do make a decent living, but at a place like Bridgewater, it obviously makes more sense to start out in the Investment Associate program assuming your end goal is PM-ship. Conversely, at other firms, there exists an IFF relationship between traders and PM's. It really depends on the strategies that interest you. The path at DE Shaw is going to be different than the path at Fidelity Investments.

(3) I'm a math major, so I've looked into the MFE considerably; however, I would prefer to let someone else handle the reigns here -- maybe manbearpig or Illini could shed some more light on the subject. I think that, assuming you get into a top MFE program (Stanford, NYU Courant, Berkeley, CMU, Stanford, Princeton MFin, etc.), the risk-reward picture looks fairly rosy. You would need to put in the legwork, of course, to ensure that you don't end up in a risk job (Not that there's anything wrong with risk; plus, doing "FO risk" at a hedge fund is often times a pseudo-PM job). However, PM is an alpha-generating position -- indeed, it's THE alpha-generating position -- so you need to get as close to alpha generation as possible, and a top MFE is no guarantee. I also don't know what the operating environment for quants is going to look like in the near- and medium-term, relative to other parts of finance.

(4) My bias on this is going to be obvious, but I've always thought that, if you have the intellectual fortitude to study math, you should. Who knows? Maybe you'll get the academic itch and go discover something truly profound; if not, you'll be smarter than most people you meet. Either way, it's a win-win.

From a pure career prospect, though, having a high GPA as a math major makes you exceedingly marketable.

Hope this helped; the fact that you're thinking about careers before you even start college is great, and puts you far, far ahead of the dumbards who scrambled to find something to do junior year, like the one writing this post.

7/29/13
leonrox:

Hi, I'm a senior students who is about to start an economics program at a semi-target school.

1.For the fact that some large shops (Bridgewater, SAC, DE Shaw etc.) do hire undergrads these days, if given the chance, should one start in IB or in HF?

2.Among analyst and trader, which will develop the specific skills required for a PM?

3.If I do not want to be a back-office quant, would a top mFE be any good?

4.Should I switch to math major? I feel some funds prefer a quantitative BG.

Hope someone can answer my questions. Cheers!

It depends on the firm and your goals because there are different kinds of portfolio managers. If you want to be a short-term swing trader, you need a trading background and might end up at a firm like SAC Capital. If you want to be a value investor (buy and hold), then you need an analyst background and might try to end up at a firm like Greenlight Capital. IB will be worthless for the former and helpful for the latter, but the on the job learning at a HF is better than what you would get in IB, so you should take a HF job first if possible as long as it is a decent fund (this applies to both tracks).

MFE is good for structured products type roles, which can lead to some trading. Most traders and analysts don't have that though.

Major in whatever you enjoy, but do well. It's good to have some quant on your transcript but you don't have to be a math major. If I could do my undergrad over again knowing what I know now, I would double in finance / accounting or maybe triple and throw in a math major (would have been possible at my school if I had not done engineering instead). The only reason you would need math is if you want to get a PhD and become a true quant.

7/29/13

If you figure out how to get a job at Greenlight let me know bro.

I hate victims who respect their executioners

7/29/13

The poster above who says its generally a 20 year journey is right. There is no set path to being a portfolio manager at a hedge fund at least not in macro. I am in my early 30s and work am a PM at a large macro fund and I am pretty sure I am the youngest risk taker at the firm right now. I started in the back-office but I know PMs who have started everywhere from trading to investment banking to government to personal training (no joke). Its more about what you do in your career, how you think, and getting some luck as opposed to where you start.

7/29/13

Bondarb that is really encouraging as someone who is a year out of college and not quite on the track I would like to be on. What types of ways did these people make their way into the business?

In reply to cheese86
7/29/13
cheese86:

Bondarb that is really encouraging as someone who is a year out of college and not quite on the track I would like to be on. What types of ways did these people make their way into the business?

all sorts of different ways...i personally spent a few years in the middle-office at a small hedge fund and then was able to wrangle a job as a desk analyst on a prop desk at a bank (unfortunately these dont really exist anymore) and from there I just did very well was lucky enough to work with people who were very good and then made money when given the chance.

7/29/13

some of the crazier/wierder non-traditional stories I have seen I dont want to post b/c they are too specific and would give away the firm if anyone had heard them before...not to be paranoid...but i guess im paranoid...

In reply to Bondarb
7/29/13
Bondarb:

The poster above who says its generally a 20 year journey is right. There is no set path to being a portfolio manager at a hedge fund at least not in macro. I am in my early 30s and work am a PM at a large macro fund and I am pretty sure I am the youngest risk taker at the firm right now. I started in the back-office but I know PMs who have started everywhere from trading to investment banking to government to personal training (no joke). Its more about what you do in your career, how you think, and getting some luck as opposed to where you start.

So what's the secret? What skills do you posses that propelled you to PM?

"Sincerity is an overrated virtue" - Milton Friedman

In reply to Bondarb
7/29/13
Bondarb:

some of the crazier/wierder non-traditional stories I have seen I dont want to post b/c they are too specific and would give away the firm if anyone had heard them before...not to be paranoid...but i guess im paranoid...

This is a really good point and I completely agree -- there is no traditional path, and some of the paths people have taken would make your jaw drop. I also have some pretty crazy one of a kind examples but won't share because I'm too paranoid as well. My point is this: Your life is not over if you don't start in M&A at Goldman. A lot of people on this site seem to cling to that idea and they're wrong. If you go to a target and get into banking, good for you, but if not, there are other ways. You have to be scrappy and determined -- if you want it badly enough and you keep moving toward it in a consistent, focused way, you're going to get there sooner or later as long as you have a basic amount of intelligence and no alarming personality flaws.

One example that is ambiguous enough:

A guy I used to work with was stuck in back office roles until he was in his late 20s -- couldn't get a break into a good MBA program and couldn't move to the front office. He passed the CFA exams and networked into basically an administrative assistant / junior associate role at a fund updating spreadsheets and getting coffee and stuff like that. The PM of the fund liked him and mentored him along, and after two years threw a little capital his way to see what he could make out of it. This guy took that initial $2-3 million and has earned 25% a year for the last 10 years with a very low risk profile, raising a bunch more capital along the way. He went to a third tier school, never worked in banking, and didn't have any pedigree of any kind.

7/29/13

Even though those non-traditional stories are out there, I think there will be fewer going forward than there were 10 or 20 years ago. Competition is tough, don't slack off.

7/29/13

Great insight here, of the PM's responding, is there anything you wish you knew
before you started down your career path, or simply some general advice for
a 20 year old who wants to make Macro PM a life goal?

DLJ Analyst Class '96

In reply to buybuybuy
7/29/13
buybuybuy:

Even though those non-traditional stories are out there, I think there will be fewer going forward than there were 10 or 20 years ago. Competition is tough, don't slack off.

its funny i heard the same thing 10 years ago. "Yeah that guy did it but nowadays thats not possible". So go ahead and believe that if you want to limit yourself.

In reply to OhYeah
7/29/13
OhYeah:
Bondarb:

The poster above who says its generally a 20 year journey is right. There is no set path to being a portfolio manager at a hedge fund at least not in macro. I am in my early 30s and work am a PM at a large macro fund and I am pretty sure I am the youngest risk taker at the firm right now. I started in the back-office but I know PMs who have started everywhere from trading to investment banking to government to personal training (no joke). Its more about what you do in your career, how you think, and getting some luck as opposed to where you start.

So what's the secret? What skills do you have that helped you to become PM so fast?

"Sincerity is an overrated virtue" - Milton Friedman

In reply to Bondarb
7/29/13
Bondarb:
buybuybuy:

Even though those non-traditional stories are out there, I think there will be fewer going forward than there were 10 or 20 years ago. Competition is tough, don't slack off.

its funny i heard the same thing 10 years ago. "Yeah that guy did it but nowadays thats not possible". So go ahead and believe that if you want to limit yourself.

Yeah, seriously. I see quirky backgrounds enter all the time. Hell, I kinda LIKE the quirky backgrounds when recruiting.

I think the greatest disservice the investment industry ever did to itself was creating the perception that there was a standardized set of experiences required for entrance into the business, when investment outperformance is generated by non standardized modes of thinking.

7/29/13

Great posts by UnclePanda. Really digging the emphasis on not just finance knowledge, but also general knowledge. SBs all around.

7/29/13

Unbelievable thread, great advice. Wish I had an SB to give everyone. Wish I had read this a year ago.

OP's comments are very similar to what is going through my head right now, except I'm out of school and regretting my time there. I am trying to find a way in, so far have been unsuccessful. I am scared to make the "wrong" choice, but it seems like maybe I might have to consider an unconventional path, no matter how hard I try.

I don't know if I have a legit shot at IB given my grades, but the more I think about that, the more I'm glad because I didn't get interested in finance because I wanted to make LBOs, or PPTs, or pitch deals, or find deals. I don't give a shit about any of that. I want to be an professional investor. That's why I became interested in finance to begin with. That's my passion, that's what I am dying to do.

Right now, I am seriously considering trying to get into trading...is this misguided? Or should I just go for it? I don't know that I'll be able to, but assuming I was able to break in, I feel that this is the best way for me not only to continue to learn something that I'm interested in (and already do for myself) but also to finally have a chance to put myself in a position to get where I want to go eventually, namely, a long/short equities fund or something similar. Any additional advice that anyone might have in the vein of what was being discussed above? It would be greatly appreciated.

"When you stop striving for perfection, you might as well be dead."

7/29/13

I disagree with quite a lot of the above. I don't think it takes 20 years to become a good PM (in pretty much every field of investing, including macro); I know plenty of guys who started controlling risk in their late 20s/early 30s (or started funds in their mid 20s - including Ray Dalio who founded Bwater at 26) and right away killed it. Nor do I think you need to have such a 'broad' knowledge base -- it is true that a lot of intelligent people tend to be broad, but I frankly have never found a single PM whose knowledge of art and sports led to him making a better bet in any market.

7/29/13

Investment track record matters. If you have managed substantial money before successfully, that goes a long way. If you are starting out, you can trade your own money to prove to yourself and others. Or you can try to show your investment track record on a verifiable platform over time. Don't know what good platforms there are out there for this. I see trackrecorder dot com is free and in pre-launch sign-up phase to do this.

In reply to OhYeah
7/29/13

OhYeah:

Bondarb:

The poster above who says its generally a 20 year journey is right. There is no set path to being a portfolio manager at a hedge fund at least not in macro. I am in my early 30s and work am a PM at a large macro fund and I am pretty sure I am the youngest risk taker at the firm right now. I started in the back-office but I know PMs who have started everywhere from trading to investment banking to government to personal training (no joke). Its more about what you do in your career, how you think, and getting some luck as opposed to where you start.

So what's the secret? What skills do you posses that propelled you to PM?


http://www.wallstreetoasis.com/forums/just-so-you-...
In reply to Matt Lim
7/29/13

Matt Lim:

Investment track record matters. If you have managed substantial money before successfully, that goes a long way. If you are starting out, you can trade your own money to prove to yourself and others. Or you can try to show your investment track record on a verifiable platform over time. Don't know what good platforms there are out there for this. I see trackrecorder dot com is free and in pre-launch sign-up phase to do this.

I have a question about this. Even though this sounds reasonable, wouldn't an Ivy grad degree carry more importance?

In reply to xqtrack
  • Anonymous Monkey
  •  7/29/13

without a 20+- year knowledge base you're relying on luck, eventually you'll give whatever you earn back. I'm doing this for over 15 years and i'm still learning.

7/29/13

Thanks for the comments. I learned a lot.

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