Also known as Investment or Asset Managers, Fund managers make investment decisions on behalf of clients. They buy and sell shares, bonds, and other assets in order to increase the value of their clients’ portfolios.
Fund managers can work for independent companies or divisions of banks (including investment banks).
Compared to other areas of banking and finance, wealth management is very resilient to economic downturns and is an area that’s not subject to the downsizing that’s currently affecting other areas of investment banking.
Types of Fund Manager
Fund Managers can work for institutional clients, such as pension funds, hedge funds and insurers, or for private individuals.
Institutional vs. Private
Institutional fund managers usually handle far larger sums of money than fund managers investing on behalf of private clients and this is therefore generally seen as the more prestigious area of fund management.
Private client fund managers deal with wealthy individuals. The amount of responsibility for the portfolio will vary from total decision-making powers to simply being responsible for tailoring the funds to suit the client. Contact with the client will vary depending on the amount of active management that the portfolio requires, but typically an investment review will be conducted at least every six months.
Hedge fund management
There are increasing opportunities in hedge fund management, an area that has seen massive growth during the last two decades, with London becoming Europe’s hedge fund capital.
Hedge funds are investment portfolios which seek to improve returns from a given level of risk or, more likely, reduce risk for a given level of returns by mixing traditional investment methods with newer shorter-term derivative techniques to neutralise the effects of market conditions. Originally regarded as alternative investment, it has become mainstream in its own right.
In addition to a great deal of expertise and knowledge of the markets, fund managers need a lot of self-confidence and credibility so that clients have faith in their decisions. This is especially vital when the market indices are falling and the portfolio may not be performing as well as expected.
The most common route into fund management for graduates will be in graduate training schemes at a large investment bank, but you can also work for asset management companies such as Baillie Gifford, Rathbones, or Schroders.
You will begin as an analyst, carrying out in-depth research into market trends and producing reports before taking on your own portfolios.
Hedge fund operations may be run as subdivisions of banks or independent companies or boutiques. They may employ five or 500 people, making it difficult to standardise career requirements; you may be required to lend a hand to all aspects of running the company, or you may have a specific position in a large firm. Take a look at the information provided by individual recruiters.
Hear from graduates working in fund management: