If you work in asset management your career path will typically involve a period as an analyst, a period as a junior portfolio manager and a period as a fully fledged portfolio manager. However, just because you start at the first base, don't presume you'll make it to the last.
Speaking at today's Alternative Investments Conference in London, Man GLG CEO Teun Johnston said there are far more good anaysts than there are good portfolio managers. While analysts need to be intelligent, analytical individuals with a strong interest in the markets, portfolio managers are far rarer beasts.
"To be a good fund manager you need certain skills that can't be taught in a classroom," said Johnston, adding that there's no correlation between studying at a good university and performing well as a portfolio manager. "Fund managers have certain personal attributes that you don't observe in that many individuals," he observed.
Johnston said these attributes include: iron discipline; competitiveness and collaboration. "It’s amazing how many people I see who are very bright and who don’t have that discipline," he said. Being a fund manager can be extremely stressful: "Let me tell you the pressure [in fund management careers] is real. Every day, when you are not performing you get calls from your clients asking what you're doing and not doing." The best fund managers can continue to deliver in the midst of this kind of pressure, said Johnston. "The so-so poeple tend to react to the pressure and change something, and then it goes wrong."
Top portfolio managers must be fuelled, too, by the compulsion to outperform. "You need to be very, very motivated," said Johnston: newsflow never stops and portfolio management is a career where you can never really switch off. The best fund managers are therefore highly competitive. This is not necessarily manifested in sporting prowess, but in an awareness "of how well they are doing relative to others."
At Man GLG, which operates a multi-strategy fund management company where discretionary portfolio managers are supported by quants, Johnston said the best portfolio managers also need to be able to collaborate and to make the most of insights provided by quant colleagues.
"Discretionary portfolio managers can be rightly cautious about giving their alpha away," said Johnston, adding that interaction between quants and PMs at Man GLG improved dramatically when they found a quant to lead the team, "who can speak to the fund managers in their own language."
Because of the stress inherent in portfolio management roles, Johnston said not all analysts even want portfolio management careers. For those who can withstand the pressure, it's worth it. "This is one of the great jobs," he concluded. "If you are good, the world will see that you are good, and you don’t have to rely on politics or whether you get on with a b or c person to be successful."
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