*This is in partnership with BloombergQuint Brand Studio
Equity markets in India have experienced massive growth—not just in terms of volume but also in breadth of investor participation and higher appetite of investor risk. This growth has placed the asset management industry in a distinct position of strength when looking to build an exciting, well-paid, high-growth career. Multiple opportunities are emerging for asset managers as we enter a new phase of India’s economic growth.
The new breed of asset managers will need to be ready for a dynamic future and be able to bring agility to meet changing requirements. It is vitally important for successful asset managers to distinguish themselves from their peers in terms of market understanding, insight, and more. In a recent webinar, Gauri Pande, CFA, explained the opportunities available in asset management in India, what the field entails, and the variety of roles to be filled. Gauri also shared insight about how to expand advantages in this space.
Kick-starting this information-packed webinar, Gauri highlighted the different types of asset managers so that prospective asset management specialists could better understand this space.
Understanding the Roles
The three types of asset managers include those who manage private equity, long-only, and long-short funds.
· A private equity asset manager must source an adequate volume of high-quality investment opportunities and possess the ability to identify and connect with prospective investee companies before competitors.
· A long-only asset manager takes only long positions, mines for undervalued securities that present great opportunities, and tries to reduce volatility and downside risk.
· Long-short fund asset managers look to take long positions in equities expected to rise in value and take short positions in equities expected to decrease in value.
Departments Within a Fund House
In the course of this engaging webinar, Gauri highlighted a typical day in the buy side of an international fund house. Although no one day is similar to the next, the specific departments that exist within the ecosystem of the fund house include the following:
· Portfolio manager and analysts who answer the important question of “what do we buy?”
· Upon answering that question, things move to the trading desk, which is responsible for the execution of buy-and-sell decisions.
· The sales and marketing division deals with all kinds of interactions, queries from customers, and communication.
· Fund houses also employ portfolio specialists who are a bridge between portfolio management, product, and sales.
· The operations team is critical to the success of any fund for settlement of trades and net asset value (NAV) declarations.
· The superstructure that includes risk, compliance, and the board of directors takes care of rules and regulations, as well as filings, in the fund.
Every piece of communication in the fund house going out from the trading desk is monitored and recorded within a highly regulated and secure environment. The perception conveyed in movies, in which traders pick up mobile phones and make deals, does not reflect reality. All orders on recorded channels, such as Bloomberg chat, calls, and dealer boards, are stringently regulated. Under Securities and Exchange Board of India (SEBI) regulation, most traders are not permitted to use mobile phones during trading hours.
Roles and Skill Sets on the Buy Side
To further enlighten prospective fund managers, Gauri emphasised and provided profound insight into each of the fund house roles and the kind of talent they seek. She explained the skill sets needed and the relevant job profiles. She further emphasised the perspectives and horizons for growth beyond an analyst or a portfolio manager.
Successful Portfolio Managers should be able to
demonstrate depth and breadth in a variety of sectors, including extensive reading and assimilation;
present conviction in stocks and portfolios;
build and correct decisions quickly; and
show rationality and dispassion, while filtering out noise.
Career growth takes place through the expansion of assets under management (AUM) raised or funds covered. Product specialists require in-depth knowledge of client engagement processes, activities of the portfolio, and risk ratios.
A successful Trading Desk Professional should be able to
take unrelenting pressure;
make quick and informed decisions and decipher an overload of information;
sustain unwavering integrity; and
hold nerves of steel.
Career growth takes place through expansion from a trader to head of desk. International firms also present the option of moving or taking charge of new geographies (e.g., getting the opportunity to lead APAC or EMEA). The role of the CFA charter is particularly relevant for the trading desk because this function is the first line of defence in maintaining ethics and integrity, especially when dealing with material nonpublic information (MNPI).
A successful Asset Management Compliance Professional should be able to
demonstrate knowledge of adherence to fund and client guidelines;
conduct regulatory filings and inquiries;
monitor risk ratios and the performance of funds; and
engage with key stakeholders when funds underperform or are considered too risky.
Compliance professionals must be detail oriented and meticulous. Again, a CFA® chaterholder is a natural fit for this role. Typically, most compliance professionals are either lawyers or company secretaries. In the wake of turbulence in global finance, this role is especially relevant for charterholders. The CFA® Program curriculum helps asset management professionals appreciate the responsibilities of compliance, thus introducing several new opportunities. An operations manager forms a critical part of the backbone of the asset management company.
A successful Operations Manager should be able t0
settle trades;
manage cash flows, subscriptions, redemptions, settlements, and deal subscriptions;
demonstrate in-depth product knowledge; and
show attention to detail and a quick response time.
Buy Side 101
Before contemplating a career on the buy side, consider the following essential points:
· Structures on the buy side tend to be flatter than the sell side.
· This lean structure is composed of a couple of portfolio managers and a small pool of analysts, which means opportunities could be limited.
· Hiring usually takes place laterally, or the recent trend is to hire from key performance objectives (KPOs).
· The best opportunities are local, within India.
· Integrity is paramount because you are investing client wealth. Poor decisions have serious repercussions.
· Performance is a daily measure of whether or not you have met your benchmark. You are only as good as your last NAV.
· Technology is replacing a lot of roles, but it is not a deal breaker on the buy side.
· This an exciting career option despite being a highly regulated industry.
The Importance of the CFA® Program
If you have a background in finance, accounting, economics, or business and seek a career in asset management, the CFA Program is the right way forward. As a three-part exam, the CFA Program tests the fundamentals of investment tools, valuing assets, portfolio management, and wealth planning.
You earn the right to use the CFA® designation and become a CFA charterholder after completing the program and application and following acceptance by CFA Institute. CFA charterholders gain the opportunity to work in senior and executive positions within investment management, risk management, asset management, and more.
Excerpts from the Q&A Session
Gauri’s presentation was followed by an interactive Q&A session that answered real-world questions Following are excerpts from the informative and insightful answers given by Gauri:
· I have cleared Level III. I’m looking to join as an analyst or portfolio manager in a global asset management company. Where can I apply?
Given that it is a flat structure, global firms, in reality, are cyclically driven. This CFA charter is the only relevant degree for capital markets as they are equity markets where the 10,000-hour rule is necessary. This aspect is essential to assimilate before developing a market sense and an instinct of what to do. The ideal thing to do would be to get your feet wet, regardless of organisation. Opportunities will abound as they are plentiful, and hiring is cyclical.
· How can I move into asset management from another field?
The way to go about it is to keep yourself informed about the markets, stay abreast of what is going on, and look for opportunities where they exist. Looking for opportunities in a global firm could be a slightly tricky proposition. Rather, looking for them in a KPO may be a better way to get a lateral entry in and wait for the cyclical return. Expand your horizons and seek to go beyond a portfolio manager/analyst role. Compliance and operations are massive growth areas right now, and these can be exciting options to be involved in capital markets.
· Which role has faster compensation or other functions that are preferred over others?
In terms of compensation, there is no specific rule of thumb. Asset managers come in all sizes and shapes. Broadly speaking, the front office may offer higher compensation than the back office. Additionally, international managers typically start higher than the domestic side. However, there is no ceiling for top talent everywhere, which means there is a market that pays very well.
· How does a CFA charter help in addition to being a chartered accountant or holding an MBA?
The status of a CFA charterholder is paramount. Having the coveted CFA charter can allow you to understand your fiduciary duties better. For instance, two important subjects that are fundamental to capital markets are covered in the chapter “Portfolio management and ethics.” In addition to the study hours, landing an asset management job with the CFA charter is seen as a badge of honour. Having an additional degree is a bonus.
In Conclusion
Capital markets, regardless of automation, are still about relationships. Fundamentally, regardless of the level of automation, two aspects will never go away. The first relationship is between a fund and its clients. The second relationship is between the buy side and the sell side. At the heart of the matter, asset management is a relationship business. Combined with the ability to establish trust, boost technology, and build relevant customer experiences, asset management leaders also need to
· be more responsive to client needs,
· build a deeper relationship with clients,
· make responsibility a priority, and
· provide customization and employ technology to play a role in differentiation.
View the complete webinar and gain more insights on building great careers in asset management as well as earning an unbeatable advantage through achievement of the CFA charter:
RECOMMENDED FOR YOU
POPULAR