Lets Talk Asset Management

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Thanks

Anyone else?

curious as well......

StartopGot a few questions about asset management -

First, what level of trading would a PM engage in on the day to day? Its hard for me to conceptualize the difference between trading and asset management, other than traders take positions that pay off more immediately and exit their trades more quickly on average. Is this accurate?

This is a style-specific and product-specific, but in general AM is given a longer time horizon to realize an investment thesis, even though something like a statistical strategy can be very high-frequency versus a distressed debt trader. AM has to be versatile enough to meet client goals for volatility and performance, whereas a trader has to deal with internal risk management constraints that are not necessarily tied to those things. Traders may not necessarily have investment theses, but have to be mobile enough to set the widest bid-ask possible to make money.

It depends on the shop once again for how involved the PM is involved in day-to-day trading; a lot of bigger shops tend to have an execution trading desk where traders are up-to-date on current market color. Execution traders add value by breaking up size creatively and maybe some very short-term alpha generation while the PM is more responsible for overall investment theses and their realization. At my place there is a dedicated analyst that is responsible for portfolio maintenance and floats ideas to the PM who approves them, and then it's sent to the execution desk.

And finally - what is the best way to break into one of these? I will be a rising senior next year and have an BB SA internship in IBD lined up for the summer. I know the work is a lot different though. I go to a nontarget, so outside of breaking in from undergrad, what do you suggest? MSE? MSF? I have heard mixed things about the level of MBA recruiting these firms do.

Thanks in advance for the help.

IBD means fundamental l/s in equity or debt (or maybe event-driven if you're lucky), so the best way is honestly dumb luck and networking because positions are much more limited. Coming from IBD you have an understanding of fundamentals and will be pegged as a research analyst first.

The way to really differentiate yourself besides understanding accounting and valuation (which IBD is supposed to be good at) is an understanding of risk that S&T usually provides and what makes something actually a good investment thesis besides "oh this is way undervalued via my DCF model that uses these assumptions."

MBA recruiting is sort of spotty, MSF/MFE is for pretty hardcore quantitative research roles....the best times to break in are straight out of undergrad or maybe as an associate.

I would be wary of saying that S&T experience will help you break into the buyside. There are only two things that will unequivocally help you break into AM, and those are a CFA and networking.