Total AUM or portfolio AUM as a benchmark?
What do you guys consider as a benchmark for an asset manager to be considered small, medium, large and mega large (the Blackrocks of the world). With regard to future job opportunities, is it relevant how large the portfolio that you were an analyst/junior PM for was, or how many AUM the firm as a whole has amassed? I'm interested in "traditional" AMs who manage active mutual funds for Institutional clients.
I'm trying to gauge where I stand in terms of my future employer, and to add some info to my decision making process regarding which team to join.
Cheers!
I would focus on other things aside from absolute size - what is the persistence of the performance for the given strategy you will be working on, maybe overall performance across strategies. What's the turnover look like? Where do the funds, or strategies broadly, rank relative to other firms. Inflows vs. outflows - are the strategies growing as they continue to perform? Where do you want to go - will you get the hands on experience that helps you get there? Are there opportunities internally to take on additional sectors, asset classes should you want to, etc. Same with client base - are they at risk due to client types?
There's plenty - but those are some that come to mind. If you are first starting out, I could argue that you should look to work at the larger ones - get a broad experience, network, name recognition - then specialize towards smaller firms as you grow throughout your career, etc. But I think you should focus on quality of experience, expertise within their vertical and some of the above.
Thanks for you insight. Those are all things I am currently already considering, but will be able to gauge better once I start on the job. I was more so trying to get a feel for a rough categorization of fund size. For example I know that for hedge funds the magic number to be considered a large fund is around $1B AUM. Cheers for your great content on the AM forum by the way :) I've read many of your insightful comments.
I appreciate the kind words, I try to be helpful where I can!
So - with respect to AUM and sizing, my general rule of thumb is that the larger you are - so think PIMCO at around $900 billion or so, up through Blackrock and Vanguard - you're basically a supermarket for financial products. You get a mix of products, strategies, asset classes - they could conceivably offer you about whatever you want, in any form you want. They are as much a marketing company - especially for their myriad fund products - than they are a 'manager'. They certainly do manage money, but in some ways it's almost secondary. Note - i'm using a mix of AUM quotes... so work with me on the actual numbers, isolating for institutional in most cases (i don't know much about retail).
Now flip to the other end - let's pick someone like a Baird, IRM, maybe even NEAM (all in the $50 to $90 billion range). When you go to those managers, you are getting fixed income, primarily core fixed income and it's near cousins - or in the case of NEAM, someone who specializes in nothing but insurance money. They are more the specialized, niche managers who focus on what they do - and do it well. I'd argue that when you get that $100 billion and below, you are looking at more specialized managers - with a focus or expertise in something... either by client base, asset type or strategy type. Sometimes you'll find someone who does a lot - but again, I'm generalizing.
When you get in between - you get a wider range. You'll have firms like federated, who basically are a massive provider of liquidity at somewhere around $500 billion in size. T Rowe who does a lot of fixed income, alongside other things, they are in the $600 range range. The banks used to, before they all decide to sell themselves, have that $500 or $600 billion of all sorts of stuff across the board - Morgan Stanley, Wells Fargo. Wellington, dimensional fund advisors, Aberdeen - another group where they manage a wide variety of stuff.
Again - I'd take all of this as a vast generalization of different segments as I think about them - there's plenty of carveouts and other valid ways of characterizing firms. Much of it is who and what you compete in. $5, $10 and $20 billion you are pretty small. $100 billion you start showing up on the radar. Closer to $500 billion, you are big... and over that, pretty much a giant. But, as usual, if you are a core fixed income manager - like Agincourt - competing against JP morgan or Doubleline for a mandate... you might as well be a minnow, and they run about $6 billion.
FYI - PIMCO has over 2 Trillion of AUM. Blackrock is closer to 7 Trillion. I believe the top 10 all have over a trillion at this point.
I believe he was trying to isolate institutional only AUM
Consectetur asperiores officia voluptatibus. Fuga praesentium non suscipit qui totam consequatur tempora qui. Sint dolor ut dolor et totam. Magnam suscipit rerum et rem eveniet.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...