A portfolio manager is someone who handles investing strategies for individuals and organizations. Portfolio managers decide where, how, and when to invest assets. While portfolio managers are often connected to hedge funds, they can also manage the investing plans for large organizations, like investment banks or private equity firms, or even an individual’s personal wealth.
In this guide, we’ll go over:
- What Do Portfolio Managers Do?
- Where Do Portfolio Managers Work?
- Portfolio Manager Salaries
- How to Become a Portfolio Manager
- Portfolio Manager Skills
What Do Portfolio Managers Do?
Working closely with clients, portfolio managers assess their clients’ financial wants, needs, and hopes and develop investment plans to meet those expectations. For an individual client, such as a wealthy person looking for someone to manage their assets, a portfolio manager may seek out a full array of investment options and build a robust plan for future years. That plan may even include trading securities, such as stocks, on behalf of their client.
For larger organizations, a portfolio manager may simply maintain and periodically assess existing investment decisions, analyzing profitability and suggesting new opportunities for growth.
An investment portfolio may include a variety of assets, such as stocks, bonds, and real estate. For big companies, an investment portfolio likely has plans for long-term and short-term profits, while individuals with investment portfolios may just have a few investments in the stock market. Both ends of the spectrum benefit from a portfolio manager — someone who can make sure everything runs smoothly through the inevitable ups and downs of the economy.
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Where Do Portfolio Managers Work?
Any place that investing occurs, you’re sure to find a portfolio manager. Some common places portfolio managers work include:
At an investment bank, portfolio managers work with investment bankers and analysts to develop investment strategies and find new investment opportunities. Since investment banking sometimes involves handling investments for other large organizations, portfolio managers on both sides work to maximize profits while minimizing investment risks and expenses.
>>MORE: Explore what working in investment banking is really like with Forage’s Investment Banking Skills Passport.
In the world of venture capital, portfolio managers often take an active role in helping start-up founders source the funds they need to thrive.
Being a portfolio manager in venture capital heavily relies on people skills, says Ashley Aydin, a principal at VamosVentures.
“You need to understand different pain points and views,” Aydin explains. “You also need to be a builder – rolling up your sleeves and being helpful to founders in their journeys with everything from customer introductions to fundraising [presentations].”
The whole point of hedge funds is to pool together assets from investors and turn profits for the collective group. Hedge funds typically have complex investing strategies, given they exist to minimize risk while maximizing returns — these complex strategies need someone to plan and execute them. However, in some small hedge funds, the act of managing the fund’s portfolio may be handled by the hedge fund manager rather than designated portfolio managers.
A portfolio manager in a private equity firm may be called a private equity manager, but the job is essentially the same: Take available funds from the firm, and invest them in a way that increases profits. They may also handle clients’ portfolios and source new clients for the firm.
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Portfolio Manager Salaries
Portfolio managers’ salaries depend on the nature of their work: Those working in large-scale organizations, like an investment bank, may see incredibly high salaries, whereas portfolio managers who mainly work with small portfolios or independent investors may have slightly smaller compensation packages.
Ultimately, a portfolio manager is a type of financial manager, and according to the U.S. Bureau of Labor Statistics, the salary for financial managers averages $153,460 per year. However, portfolio managers may have additional types of compensation beyond salary, such as commission, bonuses, and profit sharing.
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How to Become a Portfolio Manager
This role is typically not an entry-level position. Rather, many portfolio managers begin their careers in an investing-focused finance job, such as an investment banking analyst.
Portfolio managers need at least a bachelor’s degree to get started, preferably in a related field such as finance or economics. Along the path to becoming a portfolio manager, it is common to get a master’s in business administration (MBA) — this is a common degree for many careers in finance.
Certain portfolio managers may have a chartered financial analyst (CFA) certification, a designation that shows they have a strong understanding of finance, economics, accounting, and financial ethics. Those who work with trading securities, like stocks, may also be required to have a license and registration through the Financial Industry Regulatory Authority (FINRA).
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Portfolio Manager Skills
Being a successful portfolio manager takes more than just people skills and financial aptitude.
“There’s also an analytical part of the job in planning out your portfolio – from a stage and sector allocation perspective – and modeling it out,” Aydin says.
Some other skills you need to have include:
- Attention to detail
- Communication skills
- Understanding of financial statements
- High-level Excel competencies
- Work ethic
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