One of the key skills any portfolio manager needs to show is critical thinking. This might seem like a slightly simple way of summarising a complex job, but in any given day an asset manager will be presented with huge amounts of information and the ability to see the wood through the trees is key.
“Some of the skills you require are firstly critical thinking - can you work out what is really important?,” says Poppy Allonby, managing director and portfolio manager within the natural resources equity team at Blackrock. “You also need numeracy (are you comfortable manipulating data?) and resilience (can you adapt in the face of change, remain calm under pressure and learn from your mistakes?)”
The ability to see the wood through the trees is key within the sector
Every decision you make that affects your portfolio will be given close scrutiny. As one fund manager told us it’s like “taking an exam every day and having your score published in the newspaper”. This is one of the reasons why the conventional wisdom suggests that portfolio managers – like a fine wine – get better with age. The more mistakes you’ve made, the more cycles you’ve witnessed, the more savvy you become.
Fund managers tend to recruit from the same elite band of schools as investment banks. The University of Pennsylvania, Harvard, Columbia, University of Chicago and New York University were the top five schools for fund management employees, according to data provider eVestment, while in the UK Oxford, Cambridge and the London School of Economics dominated. However, it also attracts graduates who have no studied a finance degree.
“We have done a lot of research in what makes a good asset manager,” Paul Smith, president and CEO of the CFA Institute told us. “Technical competence, the sort of training we are doing at the CFA, was only part of the solution. Logical thinking, the ability to synthesize information, to think through problems, to learn from your mistakes. All of these things and some more which are taught in the humanities were just as weighted as the acquisition of technical information.”
This is the fundamental point – you’re not solving a maths problem in most cases. There’s usually no right or wrong answer to the issue you face, but instead you’re making a choice based on the information you have, your critical thinking skills and the experience you’ve gained throughout your career. This is why some regard asset management more as an art than a science.
Some regard asset management more as an art than a science
If you’re working in a distribution role, you need to be able to “build relationships quickly and cultivate them to become deeper”, says Thomas ‘TJ’ Verde, supervisor for the education savings group at Vanguard Asset Management.
“This is important when dealing with multiple different internal business partners, external business partners, and, most importantly, clients. In addition to this, my role requires heavy strategic thought,” he says.