Asset Management Questions

Question

I'm hoping there are some people on this board who can answer some questions on my latest career interest.

How hard would it be for someone with absolutely zero experience in asset management to come out of Stern and land a job in the industry?

Any idea what level I would start at?

Any idea of the relative difficulty of landing a spot on buy-side vs. sell-side?

naturallight · Answer

I can't say for sure, but it seems that employers are very open to career changers from top mba programs. I think the key would be showing them that you are truly interested in the industry--ie, say you wanted to work in equity research, you put together a few stock pitches over the summer.

Tough to say, but I don't think it would be entry level. If you're working on the buy or sellside for a bank, I think MBAs usually start as Associates, which is one step up from Analyst. For asset mgmt firms, I think it really varies.

I'm looking to go into the buyside, and I have heard that it is harder to find a spot for a couple of reasons. 

One, you have better economies of scale on the buyside--assets can grow much faster than the number of people you need to manage those assets. So you could have 10 people managing $100k or 10 people managing $2bn. On the sellside, you need warm bodies to keep cutting deals. 

Two, it seems that the sellside is a lot more concentrated around the big banks, and these banks are pretty organized about the whole mba recruitment process. Go onto Lehman's site, and you'll see a whole page about their mba program. In contrast, asset mgmt shops can be small and spread out. Even a decent sized hedge fund might only look to hire one or two MBAs a summer. 

Hope that helps.

johnnyx9 · Answer

Thanks for the info naturallight. 

One more quick question for you: I'm not someone who really follows stocks or the markets. I think politics are really interesting and I'm kind of a news junkie in that sense. Once in a while when I read business articles about certain markets I find it interesting and I'm sure if I was a more active investor or involved in the industry, that I'd get totally sucked into it and find it very interesting the same way I find politics really enjoyable to follow. But up until now I just haven't put much time into following markets or stocks.

Will I be at a huge disadvantage if I'm looking to get into asset management or equity research because I'll be going up against people who have lived and breathed this stuff for years, or is it easy enough to ramp up if I make a serious effort to follow the markets and read the right publications regularly, and take lots of relevant finance classes?

naturallight · Answer

No, I don't think you will be at a disadvantage as long as you start this summer and really get into it. The MBA guys I know who are summer interns at places like Franklin Templeton and some smaller hedge funds have said that asset mgmt employers don't really care about grades, but they do like to see a strong personal interest. 

So here are some of the things that I've been doing over the past year to convey that I have a strong personal interest in asset mgmt (if you want to do sellside stuff the list would obviously be different): 

1) Read the WSJ everyday. I spend about half an hour doing this, which is enough time to fully read some interesting stories and scan the first paragraph of all of the other stories. 

2) Read as many investment books as possible. Start off with Lynch's One Up On Wall Street and Greenblatt's Little Book and You can be a Stock Market Genius. These are fun reads with practical tips. If you like it, you can move onto Grahman and some tougher stuff. 

3) Build a small stock and bond portfolio. Great way to apply some rudimentary stock research and also learn a little bit about portfolio mgmt. Start off with safer large caps, keeping things as diverse as possible. Try to track the S&P 500, not beat it. Buy and hold--keep the trading to a minimum, otherwise you'll get eaten alive on fees. 

4) Write up two stock pitches. Chicago's IMG site has some great tips, examples, and templates for this. (The weather's been too good here, I haven't done this yet. I think it's gonna be really hard, but better to do in now than while school is in session.)

5) Look into the CFA program (but only for buyside stuff)! I would not recommend trying to do this during the 1st year, but I think you could take level 1 in June right after you graduate without too much extra studying. Studying for these tests is very time-consuming--the curriculum is super broad. But the CFA is starting to become pretty standard for any research or port mgmt function in asset mgmt. 

6) Maybe try to talk with some NYU eq research guys over the summer? 

I'm sure there's some other stuff, but I can't think of it now.

johnnyx9 · Answer

That's great, thanks for the info! I'll definitely check out some of those books on Amazon right now.

cnc2 · Answer

Johnny, 

I can comment on your interest in asset management. I applied to Stern (W/L) and researched the school specifically in the area of asset management. 

1) Your biggest obstacle will be the recruiting schedule/lack of recruiting. Compared to many of the companies that dominant recruiting at Stern (read MC/IB) those interested in asset management must wait longer for their offers. 
Why? The industry is more fragmented and not dominated by huge companies who can project their hiring needs 9-12 months in advance. Therefore, rather than getting offers before Christmas, AM typically comes in the Spring. I think this is particularly tough coming from Stern due to the number of offers you may pass up just to hold out hope until the Spring. Many Stern students I spoke with that were interested in AM are actually taking jobs on the sell side or another related field in hopes of transitioning at a later date

2) MPSIF - join.

3) Start the CFA Program.

4) Statistically speaking Stern places about ~10% of its class in AM roles if you include sell side research, otherwise it is ~5%.

rhyme · Answer

You make me feel so insanely under prepared. I hope my peers are not doing all this crap.

lepium · Answer

If it helps you in any way, I'm doing nothing job-related at all, yet. 

I'm:
- still at my pre-MBA job (until the end of June), 
- still working on immunizations and trying to set up a date with the consulate for the visa.
- trying to arrange some pre-MBA road trip / holidays with friends.
- trying to pre-sell some stuff (read: fridge, TV, personal laptop, car) to friends and/or family before I need to list on e-bay.
- working on the pre-MBA required online stuff (quantitative and accounting online courses & exams).

I know we are supposed to hit the ground running, but I'm not yet ready to run... plus I know that at HBS they have a blackout period for the first couple of months in which they focus on the career advice and don't allow any recruiter on campus. 

L.

johnnyx9 · Answer

Thanks for the Stern-specific info. I guess with the recruiting schedule as it is, I should make up my mind soon.

naturallight · Answer

This is exactly what I've heard from current students. They said it's really tough to pass up the banking because of this. Aw, it's not that bad. I read the books and the paper on my commute. I work on my stock portfolio at work

. So it's not like I'm giving up much of my free time. Are you planning on joining Chicago's IMG?

EconGirl · Answer

I am not doing any of this either. I'm gonna pick up a calculus book somewhere to review for a math test in August (every student has to take a test and pass prior to matriculating - yuck!) But that is probably the extent of my prep.

died4me · Answer

Ditto! I ordered 25 books from Amazon with the intention of reading all of 'em before Aug 2nd. Now i feel that the collection of these 25 are way too broad and not a really good idea to prepare for my future career. Well, I have to admit that I still don't know what the heck I want to do. IB= $ is good but don't know whether I want/can sustain 100hrs/week load. AM= Sounds very interesting. But if I were the recruiter, I would not want to hire someone like me. :lol:

MC= very doable given my background and my interest.

chillonamill · Answer

Asset management is pretty broad. Any particular asset or client type you want to specialize in. All of the big i-banks have huge asset management divisions that recruit from NYU. You shouldn't have too much trouble getting your foot to the door, but you have to be able to speak the language to get in. I would recommend reading everything you can on finance in general, starting with Graham and Dodd "The Intelligent Investor" and Jesse Livermore "How to Trade in Stocks". One book is considered the bible of value investing and the other is by the man who was probably the best momentum investor in history. Once your done with those two, look at:
Hedgehogging
Liar's Poker
When Genius Fails
Barbarians at the Gate (more IB side stuff, but asset managers need to understand takeovers)
Any of the books on Buffett


Anybody else wish to add to this list? I'm always looking for good finance books.

saiyis · Answer

I agree with many of the things that have been posted here. I work as a Portfolio Manager at a hedge fund and from my experience and from other colleagues in the industry at the end what really matters and how you are going to be valued is by one number, that is, the return you can obtain at the end of the day, week, month, in my case, etc. I have seen many Harvard guys who have not been able to obtain positive returns for 2+ years (and therefore were out of business), and I have also seen a guy with a bachelors in Chemistry, and somehow ended in this industry and has gotten impressive performance.

But well, to focus on how to put your foot in the industry I would recommend:

- Study the CFA, which even though it is a lot of material, you will really learn a lot about finance, about its vocabulary, products, valuation models, etc. This will not only show your interest in this sector but will also show that you have some knowledge. 

- I would also read on a daily basis the financial press (Wall Street, Bloomberg, Financial Times). 

 - Get a good idea of how the markets are performing. To start just take a look at the general indices:
 - Stock Markets: SP500, Dow Jones, EUROStoxx, Nikkei225
 - Bond markets: Treasury bill spreads, Bund spreads (for Europe, specifically germany), MSCI World Gov. Bond index
 - Get an idea of how the exchange rates are moving
 - Get an idea of how Oil, Gold and commodities are performing.
 Also try to understand what moves the markets and in what direction are they moving. For this there are tons of books you can find in Amazon. Also try to get an idea of where the economy is heading and why.

I would also advice you to learn in the real world by investing some of your own money. Although first, I would buy some books about investing basics and then some more advanced books before investing, although not to avoid loosing money, because you will (investing is like learning how to ride a bicycle, you will fall several times before you can ride well), but more to learn why you lost money and why you gained money.

An MBA from a top school of course will help to get into certain Asset Management firms but the opportunities will depend on how the economic cycle is performing....also you have decide in what type of security you would like to specialize (i.e. stocks, bonds, FX, etc.)

Hope it helped

rhyme · Answer

Ok I have to ask... If you are a portfolio manager at a hedge fund why in the world would you pursue an MBA? Your take home is already huge.

saiyis · Answer

Well I am still relatively young and I would like to explore new career horizons in Strategic Consulting. For this I think that I definitely need an MBA. If you have any questions regarding Asset Management let me know and I will try to answer them

died4me · Answer

hahahaha

I have to eat my words... regarding the asset management.
Actually, i got an offer from an asset management. It was a long and hard but worth it

sudden · Answer

do saiyis and naturallight still read this forum? if so, i would like to ask either or both of you some questions re: hedge funds and AM in general.

kryzak · Answer

natural light is still around.

you could PM him.

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