eFinancialCareers

Alpha stars and beta boys look to the long term.

At a very basic level, you could say that fund management is all about investing other people’s money, and earning a fee for the privilege – be it from the man on the street or from huge institutions such as pension funds.

Fund managers come in various flavours, depending upon which strategy they are following. For example, a ‘bottom up’ manager looks at an individual firm’s investment potential before committing money, whereas a ‘top down’ manager focuses more generally on well-performing sectors. However, broadly speaking, asset managers fall into two camps – active (alpha) and passive (beta).

Active asset managers are those who have to use their skill to beat the market average and often take bigger risks with their investments for better rewards.

By comparison, passive management, or index tracking, involves selecting a portfolio of assets whose value will match that of a financial index – such as the UK’s FTSE 100, Germany’s DAX or France’s CAC 40.

Key players

Global fund management is not dominated by big US players. Switzerland’s UBS took the top spot in 2007, followed by the Barclays Global Investors (UK), State Street Global (USA), AXA Group (France), and Allianz Group (Germany), according to Pensions & Investments/W.W. There are also the massive state-owned schemes, such as FRR in France or Europe’s biggest, the government pension fund Global in Norway, which has €253bn in assets.

Roles and career paths

As a recent graduate, you won’t be managing money straight away in a fund management firm: you’ll start out as a research analyst. This less sexy role involves working closely with the fund managers, visiting companies to assess their investment potential and sifting through buy and sell information and company reports.

“We encourage graduates to meet as many companies as possible, to really get to grips with their sector and ask the right questions to get the key information,” says Claire Adams, head of graduate recruiters at Schroders.

There’s a whole range of middle-office jobs in areas such as compliance, operations, performance measurement and risk management within asset management. However, the higher paying roles fall into two categories – investment (ie, managing money) and distribution.

Investment – If, after your stint as an analyst, you find research is your forte, you can stick to this route and move up to a senior analyst position. Or you can become a portfolio manager, where you are responsible for investment decisions on a range of funds across a specific asset class – be it equities, fixed income or alternatives.

Distribution – This covers roles such as sales, marketing, product development and client servicing. These, obviously, are how the fund manager sells its services to clients and most of the jobs are focused on winning new business or maintaining existing relationships.

Pay

Fund management pay may not be stellar, but make no mistake – it’s good. Junior fund managers can earn £38k-£45k in the UK, rising to £60-£140k at a senior level, according to recruiters Morgan McKinley. Research roles come in at £60k-£120k at the senior end, while product development pays £90k+ at the most.

On the Continent, a typical fund manager with five to seven years’ experience will bring in €55k-€90k, which swells to €120k-€200k at the top level, according to Robert Walters.

But base is only part of the story and most of the cash comes from bonuses. Top fund managers have been known to pocket up to £250k in bonus alone.

Skills

In investment management, the Chartered Financial Analyst (CFA) qualification is king. Most firms will sponsor you to take your Level One exam although you’ll need to pass all three levels to really stand out.

Specific degrees aren’t necessary to get your foot in the door. Laura Everingham, head of graduate recruitment at Fidelity, says they’ve taken on graduates with “a bachelor's in anthropology, through to a specialised master's programme in investment management”.

But even if you studied anthropology, you’ll need to be numerate. “From a research point of view, you will be looking at annual reports, company balance sheets, spread sheets, and understanding broker analysis and performance indicators, so good numeracy is a solid foundation on which to build your skills,” Everingham adds.

You’ll also need to be passionate about investing and good at filtering large quantities of data. Wouter Weijand, chief investment officer, high income equity, at Fortis Investments, says: “The issue is that you will be overloaded with information, and you can only use a very small percentage of it. You need to have a feel for what is important and have the confidence in your own judgment to not follow the pack.”

And when you are managing money, and things go wrong, a thick skin is integral, says Weijand: “Two thirds of the time you will make the right call and one third will be wrong. You have to accept and be able to move on from that, which isn’t easy when you look at your screen and see your investment has shrunk by a million euros. Everybody makes mistakes and you have to be able to learn from these and move on.”

Click here to find out about global trends in fund management.