Definition: Asset Management refers to the division of a financial institution or hedge fund that manages investments on behalf of clients, from planning an investment strategy through to execution of trades, diversification, reporting and rebalancing.
Because Asset Management is so broad, this article features a number of case studies that illustrate the range of AM careers that are possible.
The main “pure play” asset management firms are mutual funds – firms that collect money from the public and invest it into specific pooled investments.
Mutual funds tend to be much more stable from a personnel standpoint. There’s far less entry-level recruiting than, say, hedge funds, and there’s lower turnover – especially at the top levels.
AM firms seek the following qualities in candidates:
As a student, you can boost your chances of breaking in with internships, participation in investment clubs, and networking, networking, and more networking.
The recruiting process is typical of other roles in finance:
For more detail, refer to our article on asset management internships.
Salaries and compensation at AM firms such as mutual funds tend to be lower than those in IB, PE or Hedge Funds.
If a high salary is your goal, you’re usually better off starting at one of the largest firms worldwide with $100+ billion in AUM – the likes of Fidelity, Wellington, T. Rowe Price, PIMCO, MFS, and so on.The higher the AUM, the higher the fees, and the higher your potential compensation.
Assuming you’re at a large AM firm with $100B+ AUM:
At smaller firms, you can assume lower compensation closer to the bottom of these ranges and perhaps much lower, especially at higher seniority levels.
In general, AM offers better work/life balance and less stress than hedge funds, but also a lower compensation ceiling and slower advancement.
Here are a few differences between the two:
When you work at an AM firm, your most likely exit opportunities are other funds that use similar strategies.
You may be able to do it if you’ve worked in one of those before joining a hedge fund or mutual fund, or you complete an MBA, but otherwise, it’s a challenge.
Like all types of finance careers, There are more professionals seeking Asset Management roles than there are jobs available.
Funds need people who are technically proficient and who demonstrate strong “fit” and passion for investing. They want to hire small teams of the top professionals who can hit the ground running and add value from day one.
That’s why many aspiring AM professionals invest in specialized courses and training to help them get noticed, get hired, and get promoted.
Some of the courses offered by Mergers & Inquisitions and Breaking Into Wall Street include: