Portfolio management vs asset management
Hi, current dcm IB analyst. I’ve been offered a job to go to the portfolio management side of an asset manager.
From my understanding they are setting the portfolio parameters for their various third party asset managers (wide variety of asset classes) and not directly underwriting the deal.
What kind of pay progression can I expect compared to a more classic asset management job that is underwriting issuances on a deal by deal basis? How about the marketability of the skills with this job?
Is this something worth taking, or should I shoot for a more classic dcm exit?
Switching from a DCM IB analyst role to a portfolio management position within an asset management firm can indeed mark a significant shift in your career trajectory. Here's a breakdown of what you can expect in terms of pay progression, skill marketability, and whether this move aligns with your career goals, based on insights from the Wall Street Oasis dataset.
Pay Progression
Portfolio Management: In portfolio management, especially at a firm where you're setting parameters for third-party asset managers across various asset classes, your compensation can be quite competitive. Initially, your base salary might be in line with what you'd expect in a traditional asset management role, but bonuses can vary significantly based on the performance of the portfolios you oversee. As you gain more experience and if the portfolios perform well, there's potential for substantial bonuses.
Classic Asset Management: Traditional asset management roles, particularly those focused on underwriting issuances on a deal-by-deal basis, also offer competitive salaries with performance-based bonuses. The key difference might be in the nature of the bonuses, which are more directly tied to the success of individual deals rather than the broader performance of a portfolio of assets.
Skill Marketability
Portfolio Management Skills: The skills you acquire in portfolio management, such as asset allocation, risk management, and understanding of various asset classes, are highly transferable and valued across the financial industry. These skills can open doors to roles in investment strategy, risk management, and senior positions within asset management.
Classic Asset Management Skills: Skills gained in classic asset management roles are also marketable, especially your deep understanding of deal structures, due diligence, and specific market segments. These skills are particularly valuable if you aim to specialize in a certain type of asset or market.
Career Consideration
Portfolio Management: If you're interested in a more strategic role that involves overseeing a range of asset classes and working with third-party managers, portfolio management could be a rewarding path. It offers a broader perspective on the asset management industry and can lead to senior strategic roles.
Classic Asset Management/DCM Exit: For those deeply interested in the intricacies of deal-making and underwriting, staying closer to classic asset management or pursuing a DCM exit might be more fulfilling. These roles allow you to dive deep into the financial structures and strategies of individual deals.
Conclusion
Deciding whether to accept the portfolio management offer or aim for a classic DCM exit depends on your career aspirations. If you're drawn to strategic oversight and enjoy a broad view of the asset management landscape, the portfolio management role could be a great fit. However, if your passion lies in the details of deal-making and underwriting, you might find more satisfaction in a classic asset management role or a DCM exit.
Remember, both paths offer valuable experiences and opportunities for growth. Consider what aspects of your work you enjoy most and where you see your career in the long term before making your decision.
Sources: Salary Progression in Asset Management, Q&A: Non-Target School to Portfolio Manager at a Top Hedge Fund – 6 Years Out of Undergrad, Only --> Asset Management Comp + Income Progression
Is this one of the most helpful bot posts?!
Hi - unless we are talking about something entirely different, what you are looking at is something akin to either outsourced chief investment officer or multi asset solutions or whatever terminology they decide to use. Point being this would be where you manage a portfolio, or portion of the portfolio, largely using outsourced managers. Your expertise in this setup is the asset allocation, manager selection, and tactical decisions for the portfolio - i.e. if you want to add high yield exposure, you go out and find the best manager that fits your specific considerations. Sometimes you allocate via an existing mutual fund or ETF - other times you can carve out a separate account with that manager, and with the right size you can have them customize a high yield strategy for you. Depending on the firm - sometimes they will also manager part of this in-house with existing capabilities - i.e. they can manage the fixed income allocation, but outsource equities to other managers. Think things like a 60/40 model portfolio, for example.
When you use the term underwriting - I'm assuming you mean investment managers who directly invest in the underlying. This would be a firm that has a core fixed income strategy that they manage for XYZ client (could be for the above situation) that you are running yourself with in house portfolio managers, research, traders, etc. In that case you are buying new issue debt on the corporate side, maybe participating in private placements, etc. as your goal is to beat or track the Barclays Aggregate.
From a skills perspective - it's all about what you want to do. The former role, where you are largely an outsourcing shop, you'll build far more skills in general in economic research, manager research, asset allocation, portfolio theory, etc. Those roles normally are client portfolio managers, manager research, economic research, etc. The portfolio managers, in this case, are largely picking managers/allocations/implementing on behalf of the client. The latter - where you are directly managing assets - you'll have portfolio managers, traders, fundamental research (i.e. equity research or credit research analyst).
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