Is Asset Management a Productive Field
Hi,
I am considering choosing to work in Asset Management and have a couple of questions about the field. I would appreciate it if someone could respond to them.
1) How hard is it to succeed in asset management, and say to become a portfolio manager one day? Do most/many people working in asset management succeed at it?
2) From my understanding (and I will readily admit that I am a novice investor) it seems that many mutual funds don't beat the market. Furthermore, even those that do, don't necessarily beat it by that much, and even those that do beat it by a lot end up charging high fees to their customers. This seems to make investing in index funds a much surer bet for most people. Therefore, when as a college student I am choosing a profession, it doesn't seem meaningful for me to devote my life to working in a field whose very existence seems to be superfluous. Is my logic flawed in any way? Comments would be appreciated.
Thanks!
1) very hard. no. 2) logic on industry is correct. somebody has to do it though, so still can be worthwhile...depends on what your opportunity cost of other professions/careers and interests are.
Hi, Thanks for the response. Just a couple of follow ups if I could. -Would you say that Hedge Funds are not subject to this critique because they seek Alpha? -Also, I see that you have PE in your Screen Name, and wanted to ask what the lifestyle is like in PE firms in terms of hours worked and also amount of necessary travel. Thanks.
All active funds (HF and MF) seek alpha but HF as an industry has performed well in terms of returns per volatility because of flexibility and diversification of strategies, shorting, and, I believe to a lesser extent, talent drain from MFs. "Alternatives" are faring better than plain vanilla active managers in terms of asset flows, but to some extent will be lumped in to the same active management secular decline.
Don't worry about lifestyle/travel for PE, if you have an opportunity to do PE, take it.
Paying an active manager to invest in large cap U.S. stocks is probably a bad idea. Generally speaking, less liquid, less transparent, and more complex strategies have a higher potential for alpha.
Would you guys recommend starting at a large firm, eg schroders, state street? What are your future possibilities within that kind of firm? How is the learning curve?
I would argue that the particular firm and particular team within that firm matter much more than the size of the company they work for.
Thanks. How do I identify in such a big money manager which team is good?
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