Investment management is the practice of cultivating and trading financial assets and securities, including stocks, bonds, commodities, currencies, real estate, and derivatives to generate returns. Such an allocation may be done for retirement purposes, to build wealth, fund charitable causes, or simply to make money.
There are three types of investments: active, passive, and index. Active investing involves actively trying to pick what options seem best ahead of current market trends and then act accordingly. Passive investing is not about attempting to predict the market, but to just invest and hope for the best. Index investing looks at historical data and attempts to follow past trends rather than try to outsmart them. Diversification of investment types is a critical aspect of asset allocation, as it minimises risk.
An investment manager (also known as fund managers or asset managers) does all this necessary legwork for clients. They help clients make the most of their portfolios by investing in a variety of potential profit-making securities and asset classes. They also make decisions about how much capital should be put towards each investment option, and how diversified a portfolio should be.
Investment managers work closely with investment analysts, and often depend on their data and recommendations to make judgement calls with clients’ portfolios. Successful investment managers typically combine initiative, research and foresight to make the right choices with their clients’ monies.
It is common for investment managers to begin their career as junior analysts working on stocks, bonds or other securities, often through entry-level graduate programmes or schemes.
They eventually advance to senior analyst positions, producing reports and recommendations for particular securities or investment options under the direction of an investment manager. Senior analysts often specialise in particular categories of securities instead of branching out too broadly.
You will eventually take on more and more client-facing responsibilities, until you transition the role of investment manager. As earning potential is typically proportional to the success of investment options, managers tend to remain hands-on to keep abreast of the latest market trends. You may find yourself traveling a lot to gain a first-hand understanding of potential investment options or sectors.
Some firms may require Certified Financial Analyst (CFA) qualifications before you can be promoted to investment manager status ̶ especially if they are servicing international clients. Make sure to check with prospective employers about their requirements before choosing to embark on this career path.
Even in financially uncertain times, career prospects for investment managers can remain largely stable since expert advice is valued even more by concerned investors. However, market volatility often calls for managers to weigh the situation and come up with contingency plans if needed.
Having a finance-related degree is a plus, but not essential. Rather, having enthusiasm, relevant past internship experience, and the ability to comprehend the workings of financial markets are more valued.
Here are some of the key skills recruiters look for in new hires:
• High level of numeracy skills as you need to understand financial data
• Ability to work under pressure
• Good communication skills to explain complex information
• Analytical ability to make sense of a wide range of information on investments
• Ability to establish rapport and trust with clients
You will have to deal with ambiguity on a daily basis as investment options constantly shift, so cultivating an open mind and a tolerance for uncertainty will be key.
Staying a step ahead of competition through thorough research is also crucial. However, be aware that late hours are common in this line of work due to the sheer amount of research necessary, especially at the start.