What is a PM's role in a HF?
What does a PM do at a hedge fund? I'm going to be interning at a HF this summer but I don't know what PMs do. I know analysts have to find appealing stocks/bonds that fit their HF's investment strategy, writing reports, and checking up on recent investments. But what do PMs do besides giving the thumbs up?
PMs bear the ultimate responsibility for any and all trading decisions that affect their PNL.
Depends on the structure of the firm. a PM could manage other sub-PM/traders and analysts that are sector-sepcific. This would involve fielding trade ideas & allocating % of their book to trades or their sub-PMs. On the other hand, a PMs at smaller (headcount) shops might do their own trading. But to reiterate the comment above mine - whatever the PM does day-to-day, they must be involved enough to bear ultimate responsibility....doesnt mean you wont get screamed at as an anylyst for a trade going the wrong way tho
How/why did you choose interning at a HF without understanding the PM role? I'm legitimately curious because I thought most people that get into HFs have aspirations to be PMs and interning is part of the backwards planning process.
Was about to comment same idea, but with much less kind tone. Good on ya for writing it nicely.
But, yeah seriously kid, how is this even a question?
Generate alpha and fuck the secretary
Firm wide rule of no hot secretaries :(
To answer your questions seriously, and not just throw shade, think of a PM as being similar to a CEO. You might then be inclined to ask, 'what does a CEO do?' Well, that answer is generally whatever he/she damn well pleases. It's not about having explicitly defined activities, but about having an objective (high returns, low vol, liquidity, all that jazz) and accomplishing that objective however you see fit, subject whatever limitations you're subject to.
When you're a low level grunt, your job is about functions. When you're a high level player (or more likely just a high level grunt, haha) it's more about responsibilities and how you are evaluated. A PM's responsibility is for the book, the PNL, the performance, the direction of the fund. He is evaluated based on how that works out. Basically, when you're running book, the buck stops with you. Maybe you click buy and sell yourself. More likely, you have execution traders who do that for you. Sometimes (rarely) you crunch numbers yourself, more often you have someone do that for you. Sometimes you go to the office, sometimes you don't. Sometimes you meet with clients, sometimes you don't.
Generally speaking there will also be other stuff like raising money, hiring people, figuring out compliance/back office/IT/etc, and all that other bullshit. But at the end of the day, PM = portfolio manager = person who manages portfolio = choose, however you see fit, what to buy and sell. How precisely you do that will vary widely across strategies, personalities, geographies, AUM's, etc.
I've seen a dizzyingly wide array of approaches used by different PM's. I've seen a guy piss away almost entire mgt AND performance fees hiring way more guys than he needed, in expectation of future cap raise that never came. I've also (true story) met a gentleman who runs a very large family office (~$2B) literally by himself with no one but a secretary to support. There are straight quant funds, there are glorified day traders, there are CTA's, there are 'hedge funds' that just fucking buy companies and never sell them (nothing against this in principle, but shouldn't be charging 2/20ish, lol)... if you can imagine it, it's probably been attempted.
TL;DR: to sum up, what a PM does is.... whatever he thinks will make $. Sorry I can't be more clear than that – specificity would necessitate inaccuracy in this case
Would you include activist funds, venture capital, and private equity as PM's as well with just different semantics?
Yeah all the distinctions are both arbitrary and relative (i.e. A there is a gradation between PE and a L/S HF, not an binary dividing line, imo). I do HF's, and this thread is about HF pm's, but all of the senior buy side roles are just about stewarding a pool of capital. What you do with that pool is what determines the industry/strategy you title yourself
Asking what a 'portfolio manager' does is tantamount to asking what a 'dishwasher' does - the clue is in the name (this is a joke).
But on a more serious note, a good portfolio manager is responsible for security selection and portfolio construction (i.e. not just picking individual securities but knowing when to buy, when to sell, and how each security affects overall portfolio dynamics).
In order to do his job, the portfolio needs analysts (i.e. people like you) to help him research/pick securities, he needs quants to help with risk, he needs traders to help with understanding market microstructure (i.e. minimizing trading costs), he needs salespeople to help him raise assets and grow his fund, and he needs a c-suite (i.e. CEO, CFO, etc.) to help him manage the actual company.
Very good PMs would wear all these hats. That is, great PMs can research securities, manage risk and portfolio construction, trade securities, help raise assets, and sit in the c-suite (either as CIO or CEO). Very good PMs balance all these roles very well.
A bad PM does too much of any one of these things. For example, focusing too much on raising money and being on the road too much is bad; caring too much about research and not knowing how to manage people is bad; being a great quant but only caring about the numbers and not knowing anything about fundamentals/research is bad, etc.
Make money
Hedge Fund Portfolio Management? (Originally Posted: 10/21/2014)
How do you hedge funds/investment managers manage hundreds of portfolios? Proprietary software? Or does Scottrade/etrade/covestor offer a portfolio management system for managers?
Whoot?
Most investment vehicles (hedge funds, mutual funds, PE funds, etc) are what're called "comingled" funds, where limited partners buy interests in the partnership that represent a share of ownership of the investments. So a hedge (or mutual) fund with 10's( or 100's) of investors might only have one "portfolio." (Though many or even most asset MANAGERS (hedge or otherwise) have multiple FUNDS)
There are many companies that sell institutional-grade portfolio management software used by asset managers.
^^^ that's a good answer. I'd just add that there are some large pension funds etc. that will require separately managed accounts because they don't want their funds comingled. Typically these portfolios mimic the holdings of the "main fund".
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