What you need to know before becoming a portfolio manager

One of the most coveted careers in the financial industry is a portfolio manager. Portfolio managers work with teams of analysts and researchers and are ultimately responsible for making final investment decisions for funds or asset management tools. Although a portfolio manager is a position where a person must work hard throughout his career, you should understand certain parts of the job before considering upgrading to managing a portfolio.

Portfolio manager’s background

If you are still an undergraduate who is considering a career as a portfolio manager, take courses in business, economics, finance, accounting, and mathematics. In addition to an undergraduate degree, an MBA degree is also essential. Private investment companies or investment banks are optimistic about spending time learning risk management, accounting and finance. Some master’s programs offer courses specific to the stock market.

Within a company, portfolio managers are usually promoted from the position of research analyst after two to four years. Being an analyst is an excellent training to become a portfolio manager. It provides a framework for making important portfolio decisions, such as buying and selling securities and determining the basic economic conditions that affect those securities.

Types of portfolio manager positions

There are various positions in the portfolio manager field. The position depends on the following criteria:

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  1. Fund size: Portfolio managers may manage assets for relatively small independent funds or large asset management institutions. Portfolio managers can also manage the capital of large corporations (such as banks) or organizations that have large donations (such as colleges or universities).
  2. Managers who manage assets for large fund management institutions are usually called portfolio managers, while those who manage smaller fund assets are usually called fund managers. The person who manages assets for a large commercial organization or university is usually called the Chief Investment Officer (CIO).
  3. Types of investment tools: All types of money managers perform almost the same function: manage assets for their different investment tools. The scope of investment tools includes retail or mutual funds, institutional funds, hedge fund products, trusts and pension funds, as well as commodity and high-net-worth investment pools. Portfolio managers may manage stocks or fixed income investment vehicles and usually focus on one of them.
  4. Investment style: In addition to focusing on stocks or fixed income investments, portfolio managers tend to be more focused on investment styles. Investment styles include: hedging technology, growth or value management style, small-cap or large-cap stocks, domestic or international fund investment.

Licensing and certification

To engage in portfolio management work requires a professional license from the Financial Industry Regulatory Authority (FINRA). The specific combination of FINRA licenses differs depending on the type of securities and other investment assets.

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In contrast to fund managers, portfolio managers usually assume control of very large portfolios of major financial institutions. If your potential job involves more than $25 million in asset management, you will need to register with the U.S. Securities and Exchange Commission (SEC).

For aspiring portfolio managers, the most important qualification is professional certification. With enough past experience, the best choice may be the title of Chartered Financial Analyst (CFA). Other certifications—assuming they are related to economics, finance, investment, or accounting—can support resumes, but they cannot be guaranteed. Unfortunately, like many other positions, the game can focus more on what you know.

A day for portfolio managers

Although the portfolio manager’s day is varied, one constant is to check the state of the financial markets and keep abreast of current affairs. The portfolio manager will meet regularly with the analyst team to discuss market developments and related current events trends.

The portfolio manager guides all transactions of the investment fund or portfolio during the day by making the final decision on the securities involved. They also met with analysts who conducted research on various securities and securities issuing institutions. Based on their recommendations, the portfolio manager makes the final decision on which securities to buy or sell. Certain asset management styles, such as growth portfolios or funds, have higher securities turnover rates than other asset management styles (such as value management).

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In addition to meeting with analysts and monitoring markets and current events, portfolio managers have many other responsibilities. Portfolio managers often meet with senior investors and potential investors in person or over the phone.In addition, the portfolio managers of large funds often receive interviews from the financial media, such as “Wall Street Journal”, “Financial Times”, Or CNBC. Although they usually only outline the current economic situation, their appearance in the financial media can promote the investment tools they manage and the companies they represent.

Bottom line

A portfolio manager’s day is full of challenges, but it also provides financial and intellectual rewards. It starts early and often ends late, but there are many interesting challenges and opportunities in the middle. If you are good at analysis and love the financial markets and the ever-changing world of current affairs, then a career as a portfolio manager may be right for you.


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