Asset Management: Portfolio Manager Career Path?

Exclusive8's picture
Rank: Monkey | banana points 32

So after doing my own research and reading this site I have realized the Asset Management is a solid career choice. So I wanted to know what is the usual career path to become a portfolio manger at a asset management firm like BlackRock, PIMCO and wellington. Also what is the salary like for a portfolio manger at these places?

How to Become a PM?

While there is no straight forward path to becoming a portfolio manager - our users shared their thoughts on how to get from point A to point B.

Something Creative - Asset Management Associate:

The easiest and best way to do it is to work as an analyst level at one of these places [BlackRock, PIMCO, or Wellington] then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but that's incredibly hard and very, very, few people will be able to pull it off.

Brady4MVP - Hedge Fund Analyst:

You either have to start in AM as an analyst and move up, get sellside experience, and/or go to a top MBA program.

However, User @ibleedexcel,a private equity associate, had a different perspective on the career trajectory:

ibleedexcel - Private Equity Associate:

Pre-MBA roles are typically Research Associate where you support the analysts and PMs. Post-MBA role is Analyst (direct promotion for outstanding RA's is also possible). After a number of years (5-15), you can become a PM. Breaking into the Analyst role is the actually the toughest transition point.

The top MBA programs for access to the Analyst role are (in order): H/S, W, C/C (but they will all give the serious and well-prepared candidate a good shot).

The strongest MBA candidates actually turn out to be those with prior private equity experience, valued for their fundamental due diligence/research experience, valuation skills, and typically very strong background/resume to even be coming from PE. But of course, there are lots of others that successfully make the MBA placement as well.

Portfolio Management Pay Scale

Our users shared their thoughts on the pay scale below.

User @Something Creative shared:

Something Creative - Asset Management Associate:

Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

ibleedexcel - Private Equity Associate:

Comp wise: Research Associates typically don't do very well (less than banking). Analysts do well (similar-to-slightly less than banking but better lifestyle). And of course PMs can do very very well (seven-figures) with a wide distribution depending on the firm, assets, and, of course, investment performance.

Read more about Hedge Fund managers salaries in another article on WSO - 7 Figure Hedge Fund Salary - Myth or Reality?

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Comments (129)

Jun 10, 2010

Unless you know someone or have a big enough trust fund to buy yourself into the position, no bank or AM firm is going to give you a portfolio to manage right out of college. Salary depends on AUM and the firm so for someone entry level it can be anywhere from 75-175 but typically 100k or below.

    • 4
Jun 10, 2010

Main difference between AM and other position is bonus. It's quite smaller.

Jun 11, 2010

i work in AM @ JPM/GS/MS in their real estate investing arm. the PMs for our funds are about 50-65 years old. they each have probabyl been with the company for about 15-20 years./

--
"Those who say don't know, and those who know don't say."

Sep 21, 2011

You either have to start in AM as an analyst and move up, get sellside experience, and/or go to a top MBA program.

Compensation can vary wildly. I imagine a PM at a place like wellington/pimco/blackrock can clear low seven-figures including bonus.

Sep 21, 2011

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

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Oct 7, 2011
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

Oct 7, 2011
FutureTrader21:
Something Creative:

The easiest and best way to do it is to work as an analyst level at one of these places then you go into a top MBA program (for PM's it's likely going to be Booth or MIT as the best in's), then you move into a PM role as part of their MBA recruit process. You could also start as Analyst, move to Associate, then to PM, but thats incredibly hard and very, very, few people will be able to pull it off. Comp is going to be a couple 100k in base and then bonus. Starting out you will probably only clear like 250-350k including bonus, but once you're actually PM on accounts instead of just a PM you will get a % of the AUM you manage. That's when you're clearing 7fig+

Thorough. U da man.

Sorry. This is wrong. Pre-MBA roles are typically Research Associate where you support the analysts and PMs. Post-MBA role is Analyst (direct promotion for outstanding RA's is also possible). After a number of years (5-15), you can become a PM. Breaking into the Analyst role is the actually the toughest transition point.

The top MBA programs for access to the Analyst role are (in order): H/S, W, C/C (but they will all give the serious and well-prepared candidate a good shot).

The strongest MBA candidates actually turn out to be those with prior private equity experience, valued for their fundamental due diligence/research experience, valuation skills, and typically very strong background/resume to even be coming from PE. But of course, there are lots of others that successfully make the MBA placement as well.

Comp wise: Research Associates typically don't do very well (less than banking). Analysts do well (similar-to-slightly less than banking but better lifestyle). And of course PMs can do very very well (seven-figures) with a wide distribution depending on the firm, assets, and, of course, investment performance.

Oct 7, 2011

So what is it then?

Sep 21, 2011
FutureTrader21:

So what is it then?

It's both. In equity land, the PM's are guys that have been equity analysts for awhile and then become lead strategists or pm's. Here you would be a research associate->equity analyst-> PM.

In more complex investment funds it doesn't work that way. When you're a portfolio manager focusing on derivatives, currency, fixed income, etc, you are typically not going to be an equity analyst or a research associate before because your skill set is really not relevant. You would be some type of associate or equivalent and then become a PM or come in as a PM or associate level via b-school. It's going to depend on your previous experience.

Oct 8, 2011

It's very difficult to generalize as people have pointed out. Some fixed income teams will have a track that looks a lot like equities, others won't. I happen to think the job is overrated, but good luck to you.

    • 1
Nov 20, 2011

what are teh pre-requisits coming out of undergrad/masters degree? What qualities do they look for?

Jul 29, 2013

so how much do post-mba analysts make at an asset management firm?

Jul 29, 2013

mutual fund ppl, in my limit experience, generally don't go to hf. the pay is worse pretty much across the board, but specifically your earnings arent high for the first 5-7 years but then can take off to $1mm or so if you're good.

CFA is a long, arduous process, just be aware.

Jul 29, 2013

CFA is garbage. My admin has one. All it shows is that you can study, but i have met too many idiots with the designation, so I am biased against it. It would help getting a job at some places, but not at our shop (hedge fund).

As far as career path, i would say go to an investment bank and get on the prop desk. then try to go to a hedge fund. However, the take on a prop desk can be as high as 15% of p&l, but for a hedge fund it is more like 8% of your p&l assuming you are not the boss. Banks are usually less of micro-managers. If you want to get rich quick, go to a prop desk where they have poor risk controls or trade a product where you are the sole person determining inputs for mark-to-market models (rate swaps are a good choice). Then you can take big bets and get paid for it.
As far as i banking versus trading, trading makes a shitload more money. An associate can expect 350 in a good year in banking, but if you crush it in trading the sky is the limit because your pay is performance based. I have friends under 26 wihtout MBAs pulling in over 1mn USD a year.
The hours are better in trading as well.

Jul 29, 2013

"If you want to get rich quick, go to a prop desk where they have poor risk controls or trade a product where you are the sole person determining inputs for mark-to-market models (rate swaps are a good choice). Then you can take big bets and get paid for it."

Aggressive suggestion. do you really think rate traders can just make up whatever they want and mark their books accordingly? come work at a bank sometime.

Jul 29, 2013

CFA is a de facto requirement in money management. While the value is questionable in banking, it is held by more and more junior HF staff. A friend recently got a job that only a MBA would have qualified him for with his CFA designation... and the fact that he was a trader. I am finishing my MBA, and not thinking about buy side, so am questioning the value of an additional CFA, however IB experience is a solid in towards HF's.

Buy side compensation can be great, but in smaller cities. Doesn't really scale as much into bigger cities, but is still pretty good for a pretty good lifestyle. Depends on what you want. Not all bankers make 8 figures all the time.

Metals & Mining I-Banker

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Jul 29, 2013

vadremc:

Asset Management is not on the banking side....

Jul 29, 2013

Please pardon me,

Everyone please replace the word "banking" in the statment aforementioned by myself, with the word "finance" as kindly pointed out to me by Tirekicker, our online diction expert. lol. Thx.

"Cut the burger into thirds, place it on the fries, roll one up homey..." - Epic Meal Time

    • 1
Jul 29, 2013

So here is what I have inferred from this thread. The CFA designation is basically now a requirement or at least quite helpful in advancing in Asset Management. I guess the reason I question this is, even though many people on here are gunning for the ibanking positions at the analyst level, many, many of these analysts seem to want exit opps in hedge funds. Then would you really not even consider enrolling in the program? I know it is a serious comittment, but I think that I could probably have level one passed by the time I graduated, and actually obtaining an analyst position at a bank won't necessarily happen for me. If long term goals include fund management, would enrolling in the designation:

A) Hurt my chances at banking because CFA is seen as completely unnecessary for banking, and thus hurt my chances in fund management because many of these jobs go to ex-bankers

or

B)Be a source for learning the fundamentals of what I think to be a long term career goal?

I mean I have read many conflicting statements from inexeperienced people such a myself, but I can't really see that completing at least level one while I have little committments would be a bad thing.

Also, to counter the staement that idiots hold the designation...Idiots hold most designations and positions...from CFA, CA, CPA,CBV ibankers...presidents. That doesn't necessarily mean they hold no value.

Jul 29, 2013

CFA is rather useless for core buy-side jobs, ie analyst/PM at MF or HFs.

However, if you are in any kind of client facing role a CFA is a useful desig to have. For example, in sell-side research, sales, client servicing/market at buy-side, consultants/fund of funds, or similar roles, pretty much ary one has a CFA or is studying to get one.

Jul 29, 2013

I'd say its a two step process. As it is, it's tough to make it on the buy side - it can be just as tough as the sell side and you're on a shorter string because you're all about P/L. You may be able to swing it because of the quality of your MBA, so it could be ok for you.

Jul 29, 2013

Incredibly unlikely.

Jul 29, 2013

I figured that, but according to the job requirements I have the necessary experience.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Jul 29, 2013

Yea, you might meet the bare minimum they published as requirements but...I would keep looking.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jul 29, 2013

I am def still looking for other stuff. But, I actually met 90% of the additional requirements, only one I didnt meet was one that was impossible to meet unless you work there. Like i said before it was hard to tell what the job actually was, at times it looked like an analyst position other times it looked like a portfolio manager position.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Jul 29, 2013

This isn't for BNY Mellon is it?

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Jul 29, 2013

No.

Aside from the job title and a few of the responsibilities it is honestly much closer to an analyst job than anything else. Even the pay is sub par compared to IB.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Jul 29, 2013

Galleon Group?

Jul 29, 2013

You're a financial advisor, sorry for my candor but I fail to believe that a financial advising career, let alone a limited one (you're 24), would prep you to be a PM. Either you have delusions of grandeur regarding your experience and background or the position is not real.

Maybe 10-15 year of advising but at the most you maybe have 6...

Jul 29, 2013

I am not an advisor, I work for a group of advisors building and actively managing their client portfolios. I was confused when I first saw the job posting as it designated it was a portfolio manager position. Upon reading the job description it was very similar to what I do now with some aditional people managing requirements. I proceeded to contact the HR department about the posting. After speaking to HR I felt that I met or exceeded about 90% of the advanced requirements, only lacking in the internal company understandings. Which HR said was to be expected from outside canidates. I am in no way banking on this application or am I having delusions of grandeur.

Also, PIE no it is not a non existiant former hedge fund.

On a rather strange and odd side note the Galleon Group linkedin page is still opperational

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Jul 29, 2013

I really don't think managing a portfolio is that complicated. Read Benjamin Graham's work and/or steal stock picks from really intelligent buy and hold investors, and you're pretty much good to go. It might sound really simple, but I've been producing market beating returns for the last 3 years now. Maybe I'm lucky, but at this point in time, I see no reason to alter my current strategy.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

Jul 29, 2013

Mike55555 is technically correct, it could be relatively simple. But, depends on what you are managing it could be extremely complex. Considering alot of portfolios have pre determined inveting guidelines and/or can only invest in certian areas i.e. bonds, equities, commodities.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Jul 29, 2013

Yeah I expected some hate on that comment, because if most people thought the way I do, the financial services industry would be a lot smaller than it is today. All I'm trying to say is that my investment philosophy is pretty simple, and based on past results, I have no reason to pay someone else to manage my money. There's guys with decades of experience and PHD's in finance who don't seem to be able to beat the market. Investing is a field where more knowledge, doesn't necessarily correlate to better results. In my personal opinion, based on past results, simplicity is genius.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

Jul 29, 2013

I agree with Mike in that this shit is a lot easier than most people think, but at the same time it's really complicated. I think a ton of firms/people overcomplicate investing and would actually do better by doing a simpler strategy that made common sense.

Finance is like golf in a lot of ways. On the surface it's simple, put the ball in the hole; but there's also a ton of nuance to it. Some people overthink it and suck, others just grip it and rip it and play well. To be the best, you gotta have a balance of both, be able to do the really complicated stuff but at the same recognize when it's unnecessary. The athletic person isn't always the best golfer, just like the most intelligent person isn't always the best investor.

I could simplify my whole portfolio into like 5 or so "main trades" (i.e. the "alternative beta" generated by benchmarking to something unique as opposed to the S&P 500 or some other such basic index). Then, you just generate alpha on top of this alternative beta by maximizing risk/return relative to that custom benchmark (i.e. being a good stock picker, employing optimum options strategies, etc.). Still, if I told you the 5 "main trades", and you held them for the next 10 years, you'll rape the market because this alternative beta strategy is mispriced (and I'll generate alpha on that, and make even more still, lol).

Jul 29, 2013

blackfinancier, aren't you an 18 yr old freshman as well? not trying to be an ass. justsaying

Jul 29, 2013

Blackfinancier, you do realize that there are hedge fund managers that base their strategy off of animal migratory patterns in Africa and all sorts of other crazy shit. I would argue that the logic behind an investment strategy is far less marketable than the results it produced. When you produce results, people are willing to believe almost anything.

BTW, I can't really think of a reason why stealing the smartest ideas from the smartest people is not logical.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

Jul 29, 2013

I highly doubt that you are qualified to be a true PM. Take a look at CFA Level 1 materials on portfolio management and tell me if you comprehend a lot of the stuff in there.

Jul 29, 2013

I'm reading books, studying hard, but above all else the results of my portfolio are the most important part of my long-term plan. In all honesty, if things keep going the way they're going, in less than 10 years, I won't need anyone else's opinion to get my ideas off the ground. I've already produced market CRUSHING returns over the last three years, with a series of very simple investment strategies. In my eyes producing compounded annual returns in excess of 20% over a 5 year period is not very far fetched.

Think big or go home. Excuse me for being a non-target with a sense of entitlement, but in my eyes scoring an analyst position with an hourly wage of less than $30/hr is not the epitome of success. The epitome of success is not having your boss take a shit in your mouth every time you go to work.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

Jul 29, 2013

Sorry for going on a drunken rant on the analyst position. It's just that the job I work is pretty much irrelevant to my long-term plan. Most people think of wealth creation in terms of the job they work, but I see a much different picture. For me it boils down to: 80% Equities and 20% LEAPS. Of course you need to be a good stock picker, or good at stealing stock picks from the right people for that to work out.

I do realize I've had a string of success in a bull market, which is not that uncommon, but I haven't just made money, I literally RAPED the market. I guess I'm either really good at picking stocks, or I have a horseshoe up my ass, either way, I'm loving every minute of it and I don't think being a portfolio manager necessarily has to be a complicated job.

Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

-Niccolo Machiavelli

Jul 29, 2013

Mike, best of luck...but wisdom is crucial to long term success

In my own experience in finance, the more you learn about markets/investing/etc, the more you realize you know next to nothing, and many times success can be attributed to luck.

I like the adage, "the harder I work, the luckier I get." And the other thing to keep in mind is the relative size of your investments. The more money you manage, it generally becomes more and more difficult to produce returns....it becomes more challenging to find enough attractive opportunities to allocate your capital in trades, etc. Although its not as sexy, think about PIMCO's total return fund...managing $250B....ALL of that money has to be put to use to create a return, otherwise it is a drag on the portfolio's performance....big picture Mike, big picture

Jul 29, 2013

Mike: There is a very small group of people who are naturally good at picking stocks. Statistics says that there are bound to be people who have long winning streaks for no reason. Most money managers think of themselves as superior stock pickers. Most underperform the market on risk adjusted basis. If I were to bet I would say you were lucky and not smart - it could be that you are one of those rare individuals that pick stocks naturally - however I highly doubt it - from a pure probability stand point not having met you in person. It is pointless to argue whether you are good or not until you have a multi year track record but even then it could be simple luck

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Jul 29, 2013

On average 5 years. 3 years, as fastest. Analyst that will be promoted to PM would need to have had analyst role (analyzing securities in many industries, broad knowledge of the market etc.) while also having pre-experience in managing portfolio. (e.g. mock portfolio or doing some roles that PM would do for example, sending buy/sell orders, selecting stocks into portfolio etc.) In addition, analyst would need to have the license to be a PM (for example, may country.) So, as an analyst, you would need to equip the Fund Manager license in order to be the licensed PM.

How long for one person to be promoted to PM depends on many things. But, it usually comes down to 1) enough experience and how well your boss can see your potential to be a good fund manager 2) skills (analytical skills, presentation skill, stress handling etc. 3) A degree (yes, CFA would help.)

Jul 29, 2013

At my shop you become Associate PM and work under a Sr. PM first to gain experience. Then the Jr. level PMs either become co-PM of that fund or lead PM of a new smaller product in order to build a track record to manage larger sums of money.

Jul 29, 2013

Would be good if someone could shed some light regarding this. Interested to know more too.

Jul 29, 2013
  1. IB
  2. Depends, if you're working at some global macro HF, then yes trader would be better. If you're working at some fundamental value or arbitrage shop, then analyst.
  3. No
  4. Math is fine, just take some accounting classes to supplement.
Jul 29, 2013

I am an equities analyst in a Global Hedge fund (dont want to disclose). If your goal is to become a portfolio manager well than you need to know just about everything about finance and have a huge general knowledge in general - history, philosophy, art, sport, lifestyle. Nonetheless, to build these skills it takes an enormous amount of reading and life skills. Generally from day one on the job, it will probably take about 20 years until you become a PM; a good one anyway. As you can imagine, this is because of the knowledge base you need to build and the understanding that you need to build across every market segment and industry - your the one making the calls for investments.

Anyway, to answer your questions:

  1. Definately HF. If you work at an IB, you are on the sell-side of the business and basically all day your just modelling. In comparison, if you work at a HF basically you build your understanding on business fundamentals. Also working at a HF it is easier to transfer across to PE in my opinion because you are looking more at the business drivers and challenges in comparison to spreadsheets. Nonetheless, this is highly subjective.
  2. Analyst. Why? a trader just trades on volaility - he composes a totally different skill set to an analyst. If you want to be a PM, you need to know how to analyse fundamentals, economics, business etc. Anyone can execute trades and if you work under a PM at a HF, he will train you in how to execute trades. Trading is more day to day. Where at hedge funds, and as a PM, your building a position based on your analysis.
  3. No
  4. Maths majors definately help. Id be looking at getting into finance and maths at university if you can.
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Jul 29, 2013

(1) As a general rule of thumb, you should be starting close to where you would like to end up, at least as close as possible. The primary benefits of banking are two-fold: (A) You keep your finance career options open until you can make a more informed decision, and (B) The all-important (at least to a lot of monkeys on this forum) PE option. If you know for certain that you want to be a Public Markets PM, then getting legitimate investment analysis experience out of undergraduate could only really help you. It doesn't make sense to subject your body or mind to the physical ailments and mental deterioration of sell side work. In a BB IBD program, you're being paid to give up ages 23 and 24, and to be a modeling monkey. At a good (and I do stress the term good) buy side shop, you're being paid to learn, and become a better thinker.

(2) This is quite firm-dependent. As a trader at a place like Bridgewater, you'll be doing execution trading only, i.e., the PM sends you a list of securities to buy and sell, and you do your best to optimize that process. It's not necessarily bad experience, and execution traders do make a decent living, but at a place like Bridgewater, it obviously makes more sense to start out in the Investment Associate program assuming your end goal is PM-ship. Conversely, at other firms, there exists an IFF relationship between traders and PM's. It really depends on the strategies that interest you. The path at DE Shaw is going to be different than the path at Fidelity Investments.

(3) I'm a math major, so I've looked into the MFE considerably; however, I would prefer to let someone else handle the reigns here -- maybe manbearpig or Illini could shed some more light on the subject. I think that, assuming you get into a top MFE program (Stanford, NYU Courant, Berkeley, CMU, Stanford, Princeton MFin, etc.), the risk-reward picture looks fairly rosy. You would need to put in the legwork, of course, to ensure that you don't end up in a risk job (Not that there's anything wrong with risk; plus, doing "FO risk" at a hedge fund is often times a pseudo-PM job). However, PM is an alpha-generating position -- indeed, it's THE alpha-generating position -- so you need to get as close to alpha generation as possible, and a top MFE is no guarantee. I also don't know what the operating environment for quants is going to look like in the near- and medium-term, relative to other parts of finance.

(4) My bias on this is going to be obvious, but I've always thought that, if you have the intellectual fortitude to study math, you should. Who knows? Maybe you'll get the academic itch and go discover something truly profound; if not, you'll be smarter than most people you meet. Either way, it's a win-win.

From a pure career prospect, though, having a high GPA as a math major makes you exceedingly marketable.

Hope this helped; the fact that you're thinking about careers before you even start college is great, and puts you far, far ahead of the dumbards who scrambled to find something to do junior year, like the one writing this post.

    • 5
Jul 29, 2013
leonrox:

Hi, I'm a senior students who is about to start an economics program at a semi-target school.

1.For the fact that some large shops (Bridgewater, SAC, DE Shaw etc.) do hire undergrads these days, if given the chance, should one start in IB or in HF?

2.Among analyst and trader, which will develop the specific skills required for a PM?

3.If I do not want to be a back-office quant, would a top mFE be any good?

4.Should I switch to math major? I feel some funds prefer a quantitative BG.

Hope someone can answer my questions. Cheers!

It depends on the firm and your goals because there are different kinds of portfolio managers. If you want to be a short-term swing trader, you need a trading background and might end up at a firm like SAC Capital. If you want to be a value investor (buy and hold), then you need an analyst background and might try to end up at a firm like Greenlight Capital. IB will be worthless for the former and helpful for the latter, but the on the job learning at a HF is better than what you would get in IB, so you should take a HF job first if possible as long as it is a decent fund (this applies to both tracks).

MFE is good for structured products type roles, which can lead to some trading. Most traders and analysts don't have that though.

Major in whatever you enjoy, but do well. It's good to have some quant on your transcript but you don't have to be a math major. If I could do my undergrad over again knowing what I know now, I would double in finance / accounting or maybe triple and throw in a math major (would have been possible at my school if I had not done engineering instead). The only reason you would need math is if you want to get a PhD and become a true quant.

    • 2
Jul 29, 2013

If you figure out how to get a job at Greenlight let me know bro.

    • 1
    • 1
Jul 29, 2013

The poster above who says its generally a 20 year journey is right. There is no set path to being a portfolio manager at a hedge fund at least not in macro. I am in my early 30s and work am a PM at a large macro fund and I am pretty sure I am the youngest risk taker at the firm right now. I started in the back-office but I know PMs who have started everywhere from trading to investment banking to government to personal training (no joke). Its more about what you do in your career, how you think, and getting some luck as opposed to where you start.

    • 1
Jul 29, 2013

Bondarb that is really encouraging as someone who is a year out of college and not quite on the track I would like to be on. What types of ways did these people make their way into the business?

Jul 29, 2013

some of the crazier/wierder non-traditional stories I have seen I dont want to post b/c they are too specific and would give away the firm if anyone had heard them before...not to be paranoid...but i guess im paranoid...

    • 1
Oct 8, 2011

Even though those non-traditional stories are out there, I think there will be fewer going forward than there were 10 or 20 years ago. Competition is tough, don't slack off.

Jul 29, 2013

Great insight here, of the PM's responding, is there anything you wish you knew
before you started down your career path, or simply some general advice for
a 20 year old who wants to make Macro PM a life goal?

DLJ Analyst Class '96

Best Response
Jul 29, 2013

People are questioning how to fast track and become a PM. The answer to this is that you shouldnt fast track - that is, unless you want to lose money. Look at the most successful and profitable HF manager in the world - Ray Dalio of Bridgewater Associates. Ray took home $3.9 billion last year and is known as the Steve Jobs of Investing. How did he make his fortune? Ray actually started of from a poor background; his dad was a musician. He warned the bush administry back in the early 90's that a liquidity crisis was coming and he also foresaw the european debt crisis because he calcluted what payments were due and when. Obviously he made a lot of money from this. He believes in understanding how the machine works. How does restructuring work? How does economics work? Hows does politics work? And he believes when you understand how the machine works, you can learn and think how to deal with the problems. Ray Dalio forecasted all the current crisis' because he studied economic history and realised that the current system is unsustainable. He says that the only way to get out of where we currently are is through reform, large debt restructuring and positive fiscal policy. The point I am trying to make is that it takes years to understand how the peices of the puzzle fit together and how the machine works. Overall, I am a working at hedge fund and Ihave been in the markets for six years. Each day I learn something new about the market. I believe that some of my past investment decisions were foolish and that right now, I could be consistent in selecting stocks that generate a positive return. Saying this, do I think I could be a PM? No not at all. I still have much to learn. In 6 years time I will look back on today and think that there is no way I could have been consistent in generating return from my stock selection. My HF manager sleeps 4 hours a night and is IMO the smartest person I will ever know; I know a lot of smart people. My suggestion to you is start saving and investing and reading. Patience is the key as is hard work.

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Jul 29, 2013

Great posts by UnclePanda. Really digging the emphasis on not just finance knowledge, but also general knowledge. SBs all around.

Jul 29, 2013

Unbelievable thread, great advice. Wish I had an SB to give everyone. Wish I had read this a year ago.

OP's comments are very similar to what is going through my head right now, except I'm out of school and regretting my time there. I am trying to find a way in, so far have been unsuccessful. I am scared to make the "wrong" choice, but it seems like maybe I might have to consider an unconventional path, no matter how hard I try.

I don't know if I have a legit shot at IB given my grades, but the more I think about that, the more I'm glad because I didn't get interested in finance because I wanted to make LBOs, or PPTs, or pitch deals, or find deals. I don't give a shit about any of that. I want to be an professional investor. That's why I became interested in finance to begin with. That's my passion, that's what I am dying to do.

Right now, I am seriously considering trying to get into trading...is this misguided? Or should I just go for it? I don't know that I'll be able to, but assuming I was able to break in, I feel that this is the best way for me not only to continue to learn something that I'm interested in (and already do for myself) but also to finally have a chance to put myself in a position to get where I want to go eventually, namely, a long/short equities fund or something similar. Any additional advice that anyone might have in the vein of what was being discussed above? It would be greatly appreciated.

"When you stop striving for perfection, you might as well be dead."

Jul 29, 2013

I disagree with quite a lot of the above. I don't think it takes 20 years to become a good PM (in pretty much every field of investing, including macro); I know plenty of guys who started controlling risk in their late 20s/early 30s (or started funds in their mid 20s - including Ray Dalio who founded Bwater at 26) and right away killed it. Nor do I think you need to have such a 'broad' knowledge base -- it is true that a lot of intelligent people tend to be broad, but I frankly have never found a single PM whose knowledge of art and sports led to him making a better bet in any market.

    • 1
Jul 29, 2013

Investment track record matters. If you have managed substantial money before successfully, that goes a long way. If you are starting out, you can trade your own money to prove to yourself and others. Or you can try to show your investment track record on a verifiable platform over time. Don't know what good platforms there are out there for this. I see trackrecorder dot com is free and in pre-launch sign-up phase to do this.

Jul 29, 2013

Thanks for the comments. I learned a lot.

Jul 29, 2013

Anyone has any idea?

Jul 29, 2013

Analyst...

You crave what you are not.
Dude, your perspective on life sucks.

Jul 29, 2013

Call Bill Gross and tell him that you're calling the shots now.

Jul 29, 2013

I don't mean to be a critic but if you haven't got a clue yet it is definitely going to be challenging. Obviously you need a GPA >3.5, solid finance internship experience, and top school to get in right now. This is the relative rule and there are plenty of exceptions.

On this site I would say it is more traditional to start as IBD analyst then move to HF or PE pre-MBA, then M7 MBA (or top10). After MBA hopefully you have options...

Or

You could go straight to a junior analyst role at a smaller value focused mutual fund that believes in efficient markets, bottom up investing, and doesn't weight macro indicators as heavily. Chances are it would not be in NYC. This would require extensive networking and you would probably have to know someone personally at the fund.

If you aren't at a hedge fund now (and on the fast track to PM) or aren't a brilliant security strategist then start studying for your CFA.

Anyway starting jobs to aim for:
IBD Analyst - sounds like it is out of the question at this point
Junior Analyst in AM or MF
Credit Analyst

Any Analyst role really - shoot for the long term and set yourself up to be in some type of research role in seven to eight years. Find a niche and make yourself a valuable team player. Also get filthy with excel and pick up some form of coding (Visual Basic ->can be used in excel, Matlab, Maple, any financial computational language for that matter). The logic in the different languages is more or less the same and once you have a basic idea its easy. Finally, it sounds like you will need an MBA unless you are very well connected.

Worst-Best case scenario - work in operations for a bio-tech or artificial intelligence company for 4-5 years, then go M7, then use your expertise on the industry you previously worked in to get into a fund.

Jul 29, 2013
StryfeDSP:

Call Bill Gross and tell him that you're calling the shots now.

This

Sep 21, 2011
BlackHat:

I like that the first piece of advice in this post was a GPA requirement

HAHA, BH. I laughed at that as well.

Sep 21, 2011

Honestly, OP, you have a long way to go before you would actually be a PM for a HF, MF, etc. Assuming you're talking equity space, you are going to have to start slowly. Think a Jr. Analyst (at best) or Research Associate type role. Things are going to vary from firm to firm and how they're structured, but basically you will have to start at the bottom and try to prove your worth in showing what you know by having some good ideas.

From there you will move into an Analyst type role where you will actually get to pitch some ideas to the team. Then after a while of showing you actually have some good ideas, you might start managing a small piece of some strategy (or maybe your own strategy depending on your firm). In between you may do b-school and most likely become Rubs Joaquin, CFA. At this point you will be a PM.

This timeline will typically be very long, and will depend a lot on what type of firm you work in, what strategy it is or investment type/style, how much AUM you will be trying to manage, and who the clients are. HF and family office you could get there sooner since its not as structured. Not that it's easier or anything like that, especially HF, but rockstars can rise to the top easier due to less bureaucracy. AM, like real AM where you're institutional, will be an incredibly long process due to the bureaucracy and BS that comes with committees deciding whether or not to allocate funds to your strategy.

The answer to your question is that there is no real answer. Someone said something about IB, but that does nothing for you in this space. IB is for banking or PE/VC. Modeling is a small part of being a PM, and anyone can learn to do a DCF. The key is whether or not you can identify undervalued companies with catalysts that are going to drive growth. That's a skill and something you acquire over time, not something a 2x2 stint will get you.

Jul 29, 2013

Equity Research might be a good start to learn the basics.

Jul 29, 2013

Top MSC in Finance and then apply to a top Asset Manager

Jul 29, 2013

Not that IBD experience is ever a negative experience, but that's not exactly the ideal experience for a future PM.

Jul 29, 2013
shialadouche:

Not that IBD experience is ever a negative experience, but that's not exactly the ideal experience for a future PM.

I have a question about this. BlackHat and many other well regarded posters recommend starting out as a research associate in AM, or perhaps an analyst in ER in order to make the jump to HF. IBD isn't recommended as the best starting point.

However, when I glance at where some of the BX M&A/RX and GS TMT end up exiting to - they get recruited by places like Eton Park, Baupost, Pershing Square, various Tiger Cubs, etc. It seems like if you want to end up at such a fund where you'd obviously learn a ton (I mean Baupost lets junior guys invest in the fund) - wouldn't it be more advisable to grind it out at a top shop for two years and then transition? I know you'd learn less about investing in those two years, but wouldn't you make that up once you're at a top shop?

Would love to hear your guys perspective.

Jul 29, 2013

^I'd love to hear experienced users inputs on this as well

Sep 21, 2011

A smaller proportion of those PE/IB guys are going to go into a HF/AM shop than are guys that come out of areas tied more to those roles. It also depends on what type of fund you're looking to go to.

How many guys go into IB expecting to do 2 years and then move to a mega fund? A lot do. How many of those roles actually exist? Very few do. How many of those roles get filled by GS TMT guys? Again, very few do. The point is that it's easier said than done. Just because you want to go to GS TMT doesn't mean you will. Just b/e you're at GS TMT and want to go to Bridgewater doesn't mean you will.

What value add do you bring to a HF coming out of IB where you're basically an Excel wiz? Not a whole lot. What kind of value add do you bring if you're a Jr. Analyst or Research Associate somewhere? A lot more than IB. Your job is tied into Analyzing companies and working closely with Senior Analysts who are doing the same and looking for untapped value in the form of catalysts. You will have started developing a different way of looking at companies, etc.

Not that this is not possible to do while you're working IB, but it's not related at all to your role. I think the guys that you see coming out of IB and going to these funds are true rockstars. Maybe they have connections, maybe they are Harvard guys, maybe they were running their own mini-funds while working in IB and getting 10%+ returns a month. Who knows.

The bottom line is that you're more likely to be able to make the move to a HF coming out of an RA role than an IB role b/c of the immediate value add you bring.

Jul 29, 2013

All right - so let's say you're a bright guy, not an intellectual investing rockstar, but around above average. You have a choice between an AM such as Wellington, Dodge & Coxe, Capital Group or some sort of top IBD group. Your recommendation is that the clear choice would be to take AM if you want to develop good skills as an investor?

I'm not just asking hypotheticals for the sake of hypotheticals, but junior spring OCR isn't far away and I would like to know if my end goal is to, as the OP said, "one day become a portfolio manager", where I should be focusing in terms of my recruiting efforts. My tuition was expensive, and I'm trying to understand which avenue would provide the most ROI (ROI being a combination of money, experience, networks, exit opportunities, investing acumen) in the long term. There's been a lot of discussion about the buy side vs. the sell side if your end goal is a good place on the buy side, and I'd like to know if both opportunities are available to you out of undergrad, which would be the best choice.

Jul 29, 2013
macro33:

Well if you are trying to break in right now that is going to be a pretty important factor. Would you disagree?

He just graduated why is GPA important NOW?

Sep 21, 2011
Dhanam:

All right - so let's say you're a bright guy, not an intellectual investing rockstar, but around above average. You have a choice between an AM such as Wellington, Dodge & Coxe, Capital Group or some sort of top IBD group. Your recommendation is that the clear choice would be to take AM if you want to develop good skills as an investor?

I'm not just asking hypotheticals for the sake of hypotheticals, but junior spring OCR isn't far away and I would like to know if my end goal is to, as the OP said, "one day become a portfolio manager", where I should be focusing in terms of my recruiting efforts.

It depends on what you will be doing at the AM place. Are you choosing between something in Research or something in OP's? If it's OP's vs IB, then go to IB, regardless of what you want to end up doing b/c you will have a better chance of spinning IB into a Research Associate role than OP's.

Hypotheticals are stupid b/c there are too many variables. Life changes. Things change. Being an Analyst right now at Capital Group or Wellington won't ensure you become a PM at some point. You're more likely to become one than someone who isn't an Analyst at one of those places, but nothing is guaranteed. You're more likely to become an Analyst at one of those places if you were a Jr. Analyst or Research Associate at one of those places. Again, simple probability.

Jul 29, 2013

Just open an etrade account and put $50 in and manage the portfolio. Success..

Jul 29, 2013

I plan to get there by not getting fired

Jul 29, 2013

I'm transitioning to AM (FI). Have a background in credit

Jul 29, 2013

going to do research for as long as I find it interesting and feel like there's more to learn, will go from there

Jul 29, 2013

*Raises hand*

How? Currently a banking regulator, planning to work into ER/AM by taking the CFA exams.

Jul 29, 2013
Jul 29, 2013

In the end, it's all about results. There are a lot of qualified people out there who suck at their job. If you want to manage portfolios, you better have some track record you can brag with when applying. 'walk the talk' is neccessary in this extremely competitive environment.

Jul 29, 2013

PIMCO absolutely has more PhDs within their portfolio management team. They do hire a good number of more traditional MBA types but most of those end up doing some type of product management or account mgmt roles. I can't speak to how easy it is to lateral from e.g. Product Management to Portfolio Mgmt within PIMCO, but I think it does happen occasionally. They are really a macro heavy shop that values intellectual achievement, so the ppl I've seen recruit well there for PM track roles all have stellar advanced degrees and published research in top journals.

The other large firms do typically have a wider cluster of backgrounds that can make it through. I think the reason you're seeing more PMs with "non-target" schools is because they tend to be a bit older, so there may be a generational difference there. Most PMs at large AM shops will be 40-55+, so they were coming up through the analyst ranks in a different environment. Nowadays I think most of these firms are looking for top candidates from the top 5 or 7 MBA programs most of the time. There are always going to be exceptions for well connected people etc. The jury is still out on how many/what backgrounds among these will ultimately make PM. I am just starting to see ppl who got their MBAs in 05-07 timeframe starting to make PM in some special cases.

Jul 29, 2013

Depends on strategy, quant PM obviously mostly PhDs with very few quant finance master folks who started as quant researcher and moved up to PM. i honestly don't know what makes one a good quant researcher, maybe some other monkeys can tell you that.

Fundamental side, people start on the buy-side as a research analyst for an industry sector or a generalist, like the Peter Lynch type. If you broke into the profession after undergrad, then awesome, you probably don't need to do an MBA or something (you won't learn squat about investing anyways, unless you go to Columbia and take value investing classes). If you are looking from the outside, then school might help, but I myself am not even sure how helpful it is to get a MFin or MBA. even then it's about proving you can generate ideas, so it's really all about having superb stock pitches.

Jul 29, 2013

I appreciate the response. I noticed that trend though even with the younger portfolio managers there does seem to be more non target schools, even with the more recent graduates, at the firms that are less concentrated in the ne.

Also can you clarify regarding macro? I understand the obvious value of an econ phd in a macro strategy. However, what would be the point of a physics or math phd in a macro strategy?

Sep 21, 2017

What are the average hours in AM in that position?