T1 vs T3 asset managers

How much a gap is there between tier 1 managers (D&C, RCG, Wellington, Capital, Select) and tier 3 managers (MFS, Putnam, Lord Abbett, Alger, Brandes, etc.)? Thinking mainly in terms of prestige / exit opps -- I know directionally which group is better, but I don't know by how much. 

I'm sure some of you will disagree with this characterization, which I welcome!

Comments (24)

2mo
forestalsaturn, what's your opinion? Comment below:

In terms of prestige, there's probably a moderate gap between the two groups, with Wellington, Capital, T Rowe, and Fidelity being the household names. But since people rarely move around on the long-only side it doesn't have too much of a practical implication for your exit opps. 

For the industry as a whole, you're generally seeing a lot of consolidation with greater share of active money flowing towards either the large asset managers (T1) or smaller boutiques with more specialized strategies. Since the pool of active money is shrinking with the shift to passive, the medium-sized asset managers tend to get squeezed out (or potentially acquired). Unit economics and comp therefore tends to be better at the large players, but it's very performance dependent (both individual and fund performance, with the latter leading to greater inflows).

Out of curiosity, what would you consider a "tier 2" asset manager?

  • Intern in IB-M&A
2mo

Interesting. Do you think the answer changes at all for someone coming in right out of undergrad? Does prestige matter more then? 

In terms of tier 2 -- I was thinking of Fidelity, T Rowe, Artisan, Harris, etc. 

Obviously all outstanding firms, just a tiny bit below the legendary status of the t1 places I listed. Fidelity is great, but people talk about wellington and capital as their dream jobs, not fidelity. Think artisan and harris are really strong but fly under the radar a bit.

2mo
forestalsaturn, what's your opinion? Comment below:

Don't think my answer changes much... most people who go into AM stay in the industry. All the shops you mentioned definitely know of each other and are great places to start a career.

Additionally, most shops don't hire straight from undergrad since few have the scale to be able to train juniors on basic financial modeling, etc. The ones that do are usually your large household names and hire from their internship programs.

The only scenario where I could see prestige mattering is b-school apps, but an MBA isn't worth it if you plan on staying in the industry. 

  • Research Associate in AM - Equities
2mo

Yeah it's hilarious seeing this intern rank the AMs here as if he has any clue. Ranking isn't a particularly useful exercise here, esp when there are so many errors in where he's put stuff

  • Intern in IB-M&A
2mo

What specifically do you think is incorrect?

I am not claiming that this ranking is 100% definitive or accurate, so am always happy to have feedback.

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  • Associate 3 in PE - LBOs
2mo

Everyone gets so annoyed at the ranking posts lol. It's funny, I agree with everyone, including OP. Yes, prestige/exit opps definitely matter less in investment management. Yes, you would be lucky to work at any of these firms. But did OP pretty much get the rankings right if you actually had to force rank them? Also yes. The difference between the tiers mostly comes down to senior level comp though so if you're very junior I wouldn't waste your energy

  • Associate 3 in PE - LBOs
2mo

T. Rowe historically growth oriented, Wellington historically value oriented, but these places get so big and are incentivized to offer every strategy under the sun that those lines get blurred

2mo
SpaceWalker, what's your opinion? Comment below:

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