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!
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?
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.
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.
Always funny to see a LO ranking like they’re banks or PE shops given the variance in structure from firm to firm. FWIW if you’re optimizing for prestige this industry is probably not for you
Fair, although empirically you can look on linkedin and compare past exits from established post-undergrad research associate programs at different managers. The dispersion of outcomes is not the same across all programs - some consistently place better than others.
Again, context matters. Exits are a weird way to look at things b/c behavior differs between firms who promote from assoc and those who dont. I’m sure D&C and Cap Group place well into bschool but if ur at Wellington, Fido, Trowe, (and some of your ‘tier 3 guys like putnam’) u dont go to bschool b/c they promote internally. If you want real coverage (which is a big deal) vs working under an analyst then Putnam > D&C and Cap Group even thought it’s ‘tier 3’. You are also ranking your tier 1 based on where ppl want to work indefinitely (unfair to trowe cuz its in a shit city) which is only relevant if ur a PM or late career analyst unless you assume that you will get there at some point (pretentious). Point being, there are a lot more factors than just prestige exits and comp that materially matter for ranking LOs, and this evolves significantly depending on career stage.
You should be grateful if you can land an internship or full-time role at any of these shops. That's all I will say.
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
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