Question is related to the activites of an Asset Allocation Analyst. I’ve just recently started looking into these opportunities and my general take is that you do macro level analysis versus in an equity reserach postion there would be a lot more micro analysis (company level) involved.
Can anyone give some insight into the day-to-day or typical career path? Any color that people could provide would be great.
As an FYI, my background is finance and accounting major, MSA, CPA, Big 4 audit (3 years) to consulting firm (technical accounting, modeling, valuation, corp finance, etc). Sitting for Leve II CFA in June. I’m 26. Looking to transition to pure valuation, ER, or asset allocation role.
Sounds more like manager research. Asset allocation generally refers to conducting due diligence on managers of different asset classes and then allocating your clients assets accordingly (based on IPS) either directly with the managers or through an LLC(s) that the firm may manage.
Honestly, this would be more interesting to me versus equity research. You’d be allocating assets across equity, bonds, real estate, commodities, PE, HF, etc. The task would be to find the perfect allocation to maximize expected return while minimizing risk and fees.
You’d also be drilling into each of these buckets to find the best equity allocation, the best bond allocation, etc.
Yes, it is more interesting, except that your allocation decisions don’t change very much. And, typically, one’s opinion on the economy or markets doesn’t change all that often. One advantage of ER is that every company is different, so if you like thinking about that stuff, you get to consider lots of new information with each new case. However, it’s also true that lots of this stuff is a crap shoot about predicting how a company will evolve.
“Usually we are recommending our clients 40% equities, 25% bonds, 20% Real Estate, and 15% commodities. In this environment, we’re changing those recommendations to 44% equities, 21% bonds, 26% RE, and 9% commodiites.”
That may be a bit extreme, but not by much.
I think what makes advising individual clients more interesting probably have to do with the liability streams and tax issues. Greenman may be on the right track with combining tax advisory with investment allocation. It may not pay as much as a hedge fund, but it probably has a nicer balance of intellectual stimulation vs. stress.
The roles I was considering were for large AM’s. Does anyone have thoughts on whether it would be easier to break into an ER role versus AA, or if it would be more beneifical from a skills / career stand point to have a few years of ER before looking at this types of positions? Offhand, I would think that it would be more competitve trying to transition right ino an AA gig at a large AM vs. a sell-side ER job.
Sounds like financial planning to me. That’s what I currently do. The research gets boring. Its a very MACRO approach as you’re trusting third party research software such as Morningstar. You can only dive so deep. You trust that the manager’s track record is going to continue. Things like fees and management consistency are big factors in your choice. It may be different if youre working for a much larger firm, but I’m at a small firm where research is limited to third party. I’m getting out of this biz though and headnig towards ER. ER involves more complexity where AA is more big picture.
This sounds like working at a consulting firm? From what others say, it is pretty much what I do for my clients.
But I have seen AA positions at Investment Manager firm such as Western Asset but i didn’t think they had any type of FoF funds? But I am curious how working at a investment manager as an AA compares to working at a consulting firm. I imagine working for an investment manager as an AA would be more “macro analysis” based compared to at a consulting firm.
Here’s a sample job listing w/ duties (from Wellington). Fidelity had a similar position open I believe but with more of a focus on an econ background.
OVERVIEW The Asset Allocation Strategies Group (AASG) partners with clients to address investment challenges through innovative multi-asset research, superior unbiased advice, tailored investment solutions, strong absolute and relative results, and access to the full resources of Wellington Management. Wellington Management provides an entrepreneurial environment, enabling and encouraging investors to seek out new directions for research and cutting-edge strategies to meet client needs. Against this creative backdrop, the Asset Allocation Strategies Group crafts multi-asset solutions for clients across the globe, including solutions for rising-inflation regimes and thematically driven unconstrained portfolios. We are currently seeking an analyst to join one of our tactical asset allocation teams. More specifically, this Analyst will assist the portfolio manager of an opportunistic/unconstrained thematic multi-asset strategy. This position can be located in either our Radnor, Pennsylvania or our Boston, Massachusetts office. The Analyst will conduct research, seeking out niche, contrarian, top-down and bottom-up investment opportunities emerging from lasting structural changes in the global economy. RESPONSIBILITIES Primary responsibilities will include: •Conducting broad capital markets and economic research •Identifying, researching and delivering actionable investment ideas across sectors, regions, and themes, primarily within the equity markets •Completing multiple complex analytical projects under tight time constraints •Attending industry conferences and company meetings, and contributing written research •Researching and understanding fundamental characteristics of major asset classes and WMC products •Working with returns databases and performing statistical analyses and model building •Researching issues related to development and structuring of multi asset portfolios QUALIFICATIONS Candidates should have the following skills: •3+ years of relevant professional experience in both top-down and bottom-up investment research is preferred; •A keen interest and passion for the global capital markets and research •Strong mathematical skills are crucial •Strong analytical mind, problem solving and logic skills combined with a creative ability to manipulate broad economic data into contrarian actionable ideas •Ability to “dig deep” on research •Ability to be decisive in face of ambiguity •Self-awareness and self-confidence to be comfortable “being wrong” •Sound judgment, good work-ethic, and impeccable attention to detail •Highly collaborative with ability to work in a team based, results-oriented environment •Strong written and oral communication skills
IMO this kind of job is really boring. Your clients will probably be large pension funds that are quite risk averse. I feel like most people treat having an investment consulting company that does asset allocation/manager research as just a compliance checklist. You’re basically just going to look at what asset classes did well and recommend them. And if the client tells you they don’t want X type of asset or want more diversification from Y type of asset then you just recommend things that aren’t correlated. The actual mix isn’t going to change drastically from period to period anyways. Skills are not really as transferable to equity research/asset management as you would think.
The manager research part can be interesting because you hear from some of the best investors in the asset class. I agree though that the skills are not transferrable to equity research/asset management. Most consultants or OCIO’s are generally ex PM’s, ibankers, ER…not the other way around.
Not sure how many people responded knows what asset allocation analyst do, I think it’s a tougher gig than ER from a supply/demand perspetive, Wellington has 100+ ER and maybe a handful of AA.
Asset allocation strategies/products proliferate in the last 18-24 months because people don’t believe in active any more or they are now all cost-aware.
If you’re looking for an asset allocation analyst role in Wellington/Fidelity, take it if you can get it. If you’re looking for a similar role in consultants, don’t bother.