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kidderek
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Asset Management v Sales Trading 31 Aug 2007, 17:45
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I hope someone can clarify:

Besides the buy-side sell side difference, what other differences are there between asset management and sales trading?

Also, is there a difference between prop trading and asset management? I suppose an asset manager trades multiple funds w/different strategies, while a prop trader has his own style and is more individualistic.

Any input from those in the know?

Thanks in advance.
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bsd_lover
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Asset Management v Sales Trading 02 Sep 2007, 01:27
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Excellent question I would like to know the difference myself.

kidderek
I hope someone can clarify:

Besides the buy-side sell side difference, what other differences are there between asset management and sales trading?

Also, is there a difference between prop trading and asset management? I suppose an asset manager trades multiple funds w/different strategies, while a prop trader has his own style and is more individualistic.

Any input from those in the know?

Thanks in advance.
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naturallight
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Asset Management v Sales Trading 02 Sep 2007, 09:10
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with S&T, you're basically trying to unload the equity from the IPOs and other transactions that the i-bankers do. you make money based on the fees from the brokerage. near as I can tell, the traders are more "operational" traders--not speculators. the sales guys usually have high level relationships with the 1st buyers of the securities--big pension funds etc.

with AM, you're helping to manage a fund. so you could do things like research, portfolio mgmt, or trading (both execution and speculation), but the end goal is to help the fund outperform. you make your money based on mgmt and sometimes performance fees that the fund generates.

Prop trading is a form of AM, but it usually takes place at a bank. you're running a fund that helps invest the excess cash that the bank generates. these guys are the cream of the crop, and often they spin off to form hedge funds. I believe guys like eric mindich and dinakar singh fall in this category.

not sure if this is all 100% correct, but I think it's in the right direction.
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Asset Management v Sales Trading 04 Sep 2007, 23:13
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Thanks,

This is good information.

naturallight
with S&T, you're basically trying to unload the equity from the IPOs and other transactions that the i-bankers do. you make money based on the fees from the brokerage. near as I can tell, the traders are more "operational" traders--not speculators. the sales guys usually have high level relationships with the 1st buyers of the securities--big pension funds etc.

with AM, you're helping to manage a fund. so you could do things like research, portfolio mgmt, or trading (both execution and speculation), but the end goal is to help the fund outperform. you make your money based on mgmt and sometimes performance fees that the fund generates.

Prop trading is a form of AM, but it usually takes place at a bank. you're running a fund that helps invest the excess cash that the bank generates. these guys are the cream of the crop, and often they spin off to form hedge funds. I believe guys like eric mindich and dinakar singh fall in this category.

not sure if this is all 100% correct, but I think it's in the right direction.
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kidderek
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Asset Management v Sales Trading 05 Sep 2007, 05:36
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asset management seems to be more in line with research. sales and trading seems to be more like pricing stocks/bonds correctly. is this correct naturallight?
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pelihu
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Asset Management v Sales Trading 05 Sep 2007, 12:18
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To me, the big difference is the scope and focus of their operations. People in S&T are responsible for one segment of the market, or one type of stocks. Their job is to keep track of all stocks in the energy sector, or the tech sector, or options. They trade in order to "make markets", and essentially they make money for their firms by making markets and facilitating trading. There are some exceptions (like the prop desks that Naturalight talked about) but generally speaking people in S&T do not necessarily make money by taking positions on stocks. Certainly, they will try to stay ahead of the news, etc., but their role is really to make the market and facilitate trades.

Asset managers tend to look at a variety of stocks. Certainly, some are focused on certain sectors or certain investing styles, but their goal is to make money based on where the money is invested. They might take long or short positions, but their role is to make money based on how the money is invested.

A really really over-simplified way to look at it is that S&T people care less about stock prices and more about trading volume, they only care about prices to the extent that they hold stocks while making markets; most traders a limited by the positions they can take. On the other hand asset managers care only about stock price and which way it is moving.