The Gateway spoke to an employee of a London asset management firm with over 25 years' experience in the industry.
What makes working in asset management special?
There are three things that make this job special.
Firstly, we're at the epicentre of global events; from politics to extreme weather, anything that affects markets and their behaviour is relevant to our work. And no two days are the same because every day something's happening which influences the way people invest.
The second thing I'd highlight is that you get to interact with very interesting people. I've spent much of my career working in the UK stock markets, which means I've met, and in some cases formed professional relationships with, the chief executives of most of the leading companies in this country.
The third thing is that in this job you're in the privileged position of being able to act on your own views about the world through the portfolios of investments you manage.
Why should students considering a career in finance look at asset management as well as investment banking?
In investment banking, whether you're in corporate finance, fixed income or equity sales, you're generally advising clients and trying to persuade them to do things. But you can't make and implement decisions yourself. However, as a fund manager, you manage a portfolio as an investor. If you think company X is going down and company Y is going up, you can take action on that view (subject to what your colleagues think and some other constraints). We don't have to persuade people to do things, we do things ourselves. We are investors rather than advisors. And I think this is the crucial and fundamental difference that, in my view, makes asset management a more appealing option.
In addition, I think a career here is potentially more interesting. At an investment bank, you might become a specialist in an area that is relatively small in the context of everything else that's going on in the markets, for example, you might become your bank's European food retail expert. In asset management, you might also work closely with companies in this sector but you'll still need to follow closely what's going on in the rest of the global economy, and so your career will never become too limited to one area.
Asset management also offers a less volatile, more long-term career path than investment banking.
How do graduates typically progress in asset management?
Graduate recruits join as trainee analysts. They're given a particular area to research, which is quite small at first – for example, a particular industry sector, country or financial product – and they're closely supervised by more experienced colleagues. But from the beginning they're given responsibility for coming up with investment ideas in their area for the fund managers to implement. We teach them how to analyse companies, market patterns, and particular kinds of product. Over time, they become more experienced, get more responsibility and, after five to seven years, will become fund managers themselves.
How do asset management firms work with investment banks?
Investment banks (known as the sell-side) try to persuade us (known as the buy-side) to purchase equities and fixed income products through them. Salespeople at banks talk to our fund managers, expressing views about what they think is going on at particular companies and in particular markets. If we decide to buy or sell something, traders at investment banks will process that transaction for us.
Is there anything else that you think students should know about asset management?
One of the things that is often overlooked about asset management is that we fulfill a social purpose. The world needs to save for its future, and we as individuals need to save for our retirements and to protect ourselves in other ways. We help people to do so by providing the necessary investment products, and ensuring that they perform.