Trader in Asset Management
Hello all,
I have been wondering what the difference is between a trader in Asset Management and securities division.
For example GSAM or JPM AM, both have trading positions in Fixed Income Trading.
What´s the difference between a "normal trader" and a trader in Asset Management?
Thank you very much
I'm a fixed income trader in a bank's asset management division. You invest money on behalf of the firm's high net worth clients in their asset management division, or help invest the division's mutual funds. Depending on your desk within asset management, this may be on an execution (the firm's financial advisers tell you exactly what to buy) or discretionary (the client tells you their risk parameters and you choose the bonds you think are appropriate.) Put simply, you are a buy side trader, you invest money.
A "normal" trader, at least to most of WSO, is a sell side trader who invests on behalf of the bank itself's balance sheet and bottom line.
Sell side traders are measured by PNL, buy side traders are measured against their benchmark.
At least at my bank, my pay is tied to our firm's products and their performance relative to their respective benchmarks, as well as how we are doing generally in terms of AUM growth that we can bill on. In fixed income, trading on the buy side for an asset manager is generally lower upside in terms of pay, but your job security is a LOT better. I like my work very much and feel good about what I do for our firm's clients.
does AM have its own trading desks? (Originally Posted: 07/03/2012)
Do asset management firms like fidelity, BlackRock, pimpco, and AM arms of BBs have their own trading desks?
I am assuming working in AM could be divided into several roles like client manager, investing from an allocation standpoint / overall strategy, and even making the investment decisions. but when the portfolio manager or whoever says "hey this is what we need to trade today" who are they talking to?
if AM has their own desks, what are exit opps for traders who work on these desks like? or is this an exit opp? (by AM i mean exclusive of hedge funds. i'm strictly talking vanilla AM)
haha and I mean 'PIMCO'. too used to typing it I guess.
Yes, they can have pretty large trading desks depending on aum. There mostly execution based at bigger shops as they are father removed from the portfolio managers. There job is to find liquidity and occasionally give an opinion based on what there seeing in the markets.
Yes they do. I worked at one, so feel free to PM any questions.
It is as Tradin said, execution based and finding liquidity. Most of the guys and gals came from sell-side trading. You have to keep up with the markets as any equity trader would. Trades are PM driven; they have a price target and the trader adds value by buying it below that target/selling it above that target. It takes a while for illiquid names to get executed; sometimes even a couple days if there is no natural seller/buyer. The traders also interact with the sales-traders from the major broker-dealers. They do this to keep up with the markets, get whisper numbers on economic data releases, and source liquidity.
Role of Traders in Asset Management (Originally Posted: 06/13/2013)
What exactly is the role of traders in AM firms or AM divisions of BB more specifically? Is it just execution of PM orders or is there more opportunity to develop you're own strategies and go off your ideas rather than just figuring the best way to chop up orders coming from the PM?
When I interned at an AM firm, the PMs made decisions on what to buy. Its the trader's job to determine when is the best time in the short term and find an entry point for that position. Look at how much liquidity there is for the type of position we want to get into. Execute, chop up orders as you mentioned. Maintain relationships with brokerages
I've spoken with two traders (one bond/one equities) who work within the AM division of a BB. Two things stuck out to me in speaking with them: 1. The bond trader had much more of a two-way relationship with the PMs, and said that he IMs and calls the PMs a lot to talk about new issues that the PM may like for his client. It's a lot harder for PMs to keep track of new issues whereas they have a pretty good idea of the stocks they like, so it's important for the fixed-income traders to get an idea of what types of bonds the PM likes for his clients, aside from executing orders that come in from PMs. The second was in speaking to the equity trader it seemed like his role was pretty standard, and he doesn't have a lot of influence on the decisions being made. Not to say he was an execution monkey just punching orders into his Bloomberg, but he said something to the effect of the order pretty much has to get executed within the day or the next morning, and that decision is more based more on liquidity than on any kind of technical observation or strategy. They essentially just figure out the most efficient way to execute what comes down from the PMs. Both were pretty short conversations, but I hope this helps answer your question a little bit.
Edit: grammar
It is highly variable, sometimes it is just execution, other times it is a combo of execution along with contributing to portfolio management and investment strategy for broader parts of the platform, possibly having his own book of some sort. Really depends on what the trader brings to the table overall. If he's just bottom of the barrel, ie knows a bunch of sell side folks and follows market technicals, then he'll be doing just execution. If he's more knowledgeable about markets or sectors or economies or fundamental analysis, then his role could be much broader. It's not always set in stone.
Thanks a lot guys definitely gives me a better idea of the trader's role.
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