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Portfolio Manager: Investment Financial Career Investment Management Strategy
Portfolio Manager: Investment Financial Career Investment Management Strategy
A portfolio manager is a person who makes investment decisions using money other people have placed under his or her control. In other words, it is a financial career involved in investment management. They work with a team of analysts and researchers, and are ultimately responsible for establishing an investment strategy, selecting appropriate investments and allocating each investment properly for a fund- or asset-management vehicle. Portfolio managers are presented with investment ideas from internal buy-side analysts and sell-side analysts from investment banks. It is their job to sift through the relevant information and use their judgment to buy and sell securities. Throughout each day, they read reports, talk to company managers and monitor industry and economic trends looking for the right company and time to invest the portfolio's capital. A team of analysts and researchers are ultimately responsible for establishing an investment strategy, selecting appropriate investments and allocating each investment properly for a fund or asset-management vehicle. Portfolio managers make decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against. performance. Portfolio management is about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and other tradeoffs encountered in the attempt to maximize return at a given appetite for risk. In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management: passive and active. Passive management simply tracks a market index, commonly referred to as indexing or index investing. Active management involves a single manager, co-managers, or a team of managers who attempt to beat the market return by actively managing a fund's portfolio through investment decisions based on research and decisions on individual holdings. Closed-end funds are generally actively managed.
large business organization or a college is commonly referred to as a chief investment officer (CIO). 2. Type of Investment Vehicles: All types of money managers perform virtually the same function: managing assets for their respective investment vehicles, which vary widely. The range of investment vehicles includes retail or mutual funds, institutional funds, hedge fund products, trust and pension funds, and commodity and high net worth investment pools. Portfolio managers may manage equity or fixed-income investment vehicles and often specialize in one or the other. 3. Investing Style: In addition to specializing in equity- or fixed-income investing, portfolio managers tend to specialize when it come to styles of investing. The range of investment styles includes using hedging techniques, a growth or value style of management, small or large cap specialties and domestic or international fund investing. A Day in the Life of a Portfolio Manager Although a day in the life a portfolio manager is diverse, one constant is checking the status of the financial markets and staying on top of current events. A portfolio manager will meet regularly with his or her analysts in order to discuss market developments and the trends of relevant current events. Since a portfolio manager's day is dictated by the start of the financial markets, they generally tend to be one of the very first employees into the office in the morning. (For more insight, see Short-, Intermediate- And Long-Term Trends.) A portfolio manager directs all of the trades the fund or portfolio makes during the day by making final decisions on the securities involved. He or she meets with analysts that have conducted research on various securities and the institutions that have issued them. Based on their recommendations, the portfolio manager makes the ultimate decisions of what securities to buy or sell. Some asset management styles, such as growth portfolios or funds, have a higher security turnover than others, such as value management. In addition to meeting with the analysts on staff and monitoring the markets and current events, a portfolio manager has many other responsibilities. Portfolio managers often meet with high-level investors, or potential investors, in person or over the phone. In addition, portfolio managers of large funds often conduct interviews with the financial media such as The Wall Street Journal, The Financial Times or CNBC. While they often only give an overview of current economic conditions, appearing in the financial media provides publicity for the investment vehicles they manage as well as the firms they represent. (Find out whether your advisor is a league leader or a benchwarmer, in Does Your Investment Manager Measure Up?) All in a Day's Work A day in the life of a portfolio manager is filled with challenge, but also offers financial and intellectual reward. It begins early and often ends late, but in-between those times lie many interesting challenges and opportunities. If you are highly analytical and have a love of the financial markets and the ever-changing world of current events, a career as a portfolio manager may be for you.