Can someone make a LO AM tier list?
Seems like on the IB forum people are making prestige rankings every day. I know those get shit on, but they've actually been very helpful to me as an undergrad in terms of understanding where each firm falls in the ecosystem. It would be helpful to get a better picture of the reputations of different firms in AM, and I haven't been able to find anything comprehensive on this forum.
As I understand it, firms like Fidelity, Wellington, D&C, and RCG fall in the top tier. But which firms are a notch below? How would places like Weiss / Putnam / Brandes / Third Avenue rank? Who's in the middle tiers? Where do BB AM groups land? I'm approaching this from the perspective of an undergrad looking for summer internship experience.
Cap Group, Fidelity, Wellington, T Rowe, Dodge & Cox are all top notch.
This has been well covered before (See: https://www.wallstreetoasis.com/forums/top-asset-management-firms). It's very hard to rank large AMs as their forte varies by asset class and strategies. However, have recruited intensely for large AM undergrad seats for a while and the general consensus across the street (including culture, comp, and difficulty to land a seat) is:
Equities:
1. Capital Group, Wellington, Fidelity, BlackRock, Dodge & Cox, T. Rowe, GMO (top value shop)
2. Putnam, Amundi, Franklin Templeton
Fixed-Income:
1. PIMCO (in a league of their own)
2. TCW/DoubleLine/Nuveen/BlackRock/PGIM
In fundamental buy-side equity research roles directly out of undergrad at one of the Tier 1 shops above, this was my comp progression:
Year 1: $85 + 20K bonus
Year 2: $90 + 45K bonus
Year 3: $115 + $75K bonus
Analyst (expected): $275K + 100-150% bonus
My PM this past year: $10M
Partner: The moon
I would also put harris associates in the top tier for equities.
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Good effort, but there’s a few I would change. Wellington and T Rowe Price are in tier 1 without question. They both make arguments for the best period.
I would move Ark invest down to low end of two, maybe tier 3.
Switch MFS and Brandes. I think Brandes is a good shop, but from what I’ve seen their performance has been subpar over longer periods of time. Strong brand though.
D&C has had a pretty shitty run for the last decade or more - just check their fund performance. Capital Group with all due respect is a closet indexer (2.3T AUM - you have to) and performance for most funds has been suggestive of that, as is obviously Blackrock and Fidelity (both FMR and FIL, though FMR tends to have a better reputation and less turnover). Ark, you mean the "disruptive tech" a la Softbank ETF provider?
MFS, T.Rowe is no worse or better than Fidelity, Wellington or Capital Group in terms of quality or process of research. I know people who work at those shops and let's just say I'm fairly familiar with the way they structure their teams/process. They all think they're super different but when you do a head-to-head comparison it's like comparing different flavors of chocolate ice-cream.
Since you're going to pretty much do the same kind of analysis at all of those shops, I'd just focus on the staying power and economics. Generally, the bigger the fund (and better the flows) the better the staying power, because they clearly know something about distribution, which is the lifeblood in this business. You get paid for AUM, so your job as an analyst is to put in good enough performance to mitigate outflows and help your distribution people sell better. As long as you keep your fees steady and closet index, your total revenue is going to grow at whatever the market is growing, sometimes 10-20% p/a. Not bad, if you ask me!
The economics is very easy to figure out. (AUM * Average Fees)-Fixed Costs = profit formula for a typical asset manager. Suffice to say places like D&C or CapGroup or Brandes with partnership structures are on average better deals for top employees than places where your comp falls strictly under the fixed costs bucket like Fidelity (would love to be Abby Johnson though...). People tend to like dividing profit over investment headcount, which is a good calculation to start with, but I can tell you from firsthand accounts that the distribution of $$$ in a partnership setup is anything but equal - even among partners.
For Equity Mutual Funds:
Tier 1: Capital Group, Fidelity, T. Rowe, Wellington
Tier 2: MFS, Dodge & Cox, JP Morgan AM, Brown Advisory, Janus, Franklin Templeton, First Eagle, Artisan, Goldman Sachs AM, Morgan Stanley IM
Tier 3: Invesco, Putnam, Bernstein, Columbia, Eaton Vance, Federated, Oppenheimer, Lord Abbett, TIAA, Nuveen, Neuberger Berman
Tier 4: The Boston Company, Calamos, Loomis Sayles, Amundi Pioneer