since I will be starting a new job soon, I was interested to know your opinion about possible career development and exit opportunities. Let me start by saying that I am not planning for my exit yet, but I am a bit unsure as to what could I do afterwards, shall I decide to switch careers.
I will be working as Investment Analyst (Manager selection/ Fund research), and I doubt I will be changing jobs - or at least I hope it won’t be necessary to do so - for a few years. I have very limited work experience, and this is an entry level job, so I would like to gain some experience first and become eligible for the charter (still about 3 years to go) so that I am in a better position to negotiate.
Is fund research and FoF portfolio management the only viable career path after such start? I do hope that I will enjoy the job, but there seem to be VERY FEW job offers in that particular field, at least where I live. Would a switch to equities/FI/ you name it portfolio management - in an analyst role? - be challenging?
Thanks in advance and congrats to everybody who passed their CFA exam recently!
Congratulations on your new job. There are no job openings in Funds of Funds because no one wants to leave. Isn’t this like a really cushy job? Get to know a lot of people, get lots of nice dinners and golf. You should burrow in there like a tick.
Manager selection/fund research is one of my primary responsibilities and easily my favorite part. Wholesalers take good care of me, I get to go to some cool due diligence meetings, and attend investment conferences. I would ditch everything else and just do that if I could.
I can see what golf skills may have to do with it, but looks?
Honestly, it was pure luck. It is also not a large company. Actually, I interviewed with a HF (well, FoHF), for the exact same position - Fund Analyst - but it didn’t work out. It would have been much more interesting, I guess. But again, what am I qualified to do if I spent, say, 7-8 years in that role? There are close to none job offers and it feels like changing jobs is impossible. That’s what is making me nervous.
I almost took a secondaries FoF (PERE) gig in London earlier this year. Exit opps are mostly sales-related as you won’t have as much direct analysis experience (whether it be doing deals in RE or stock picking). Having said that - sales roles (by sales I mean front office but not directly investment related eg. fundraising, investor relations, etc.) are broad so I don’t think you would be pigeon holed
Regarding your concerns, are you based in Germany?
You are correct that there are not many such roles based out of Germany compared to some other locations. For instance in London, you should have a lot more exit opportunities as there are simply many more asset manager with these types of roles. It shouldn’t put you off however as it is a great job with interesting tasks and you can see where the path takes you.
Question is: what is the alternative to fall back on and is that better?
I did this job for a while. You can branch off to other parts of the profession from here - namely security analysis, but will have to start from scratch again like I did. That being said, there are worse places to be in the business. At the end of the day I began to become bored with it, because lets face it - the job is more luck than skill. People say “oh we don’t just look at prior returns”. BS. That’s ALL you do at the end of the day.
So to answer your question - NO - you aren’t pigeonholed in that profession, but it is up to you to break out of it when the time comes.
I think the “exit” is that you get to know a lot of hedge fund and buy side guys, who might one day hire you in sales or some other role. If you are a sizeable client, you have access to every person and they basically cannot turn down your request. You want to meet their whole trading team? Sure, come right over. You want someone to teach you about securities valuation for three hours? No problem - it’s a client face time activity (you probably get food as well). And so forth.
Exit opps are primarily pension funds/endowments etc. Good career path, interesting, decent pay and hours. The important part, as ohai alluded, you are the ultimate client of investment managers, who are in turn clients of securities firms. You get to travel to London and NY, get wined and dined, and feel like a BSD.
how great this FoF job is depends on the person. an ambitious young person who wants to pick stocks, analyze companies and mgmt teams, and actively manage a portfolio will hate a FoF role. I know, because this was me many many years ago. you will come away with no hard skills like modeling, or knowing a particular industry super well. you literally just sit through lots of interviews of fund managers, meetings and run historical performances of different funds and seeing which one you like. also once you are a FoF analyst, the longer you stay, you are definitely more pidgeon holed. at the FoF I worked in, everyone 3 years+ that wanted out and do actual fundamental analysis had difficulty just getting out, and the few who made it had to go through a big learning reset (we were a sizeable 30 billion+ fund too) this role is awesome for people with a family, want a great work life balance, ideally has real experience actively managing a portfolio, and has a good macro perspective
Not NO transferable skill set. I mean by the time you’ll leave you will understand how the business works, some stuff about portfolio analytics, and what TO say and what NOT TO say if you become a PM some day.
I started in the job when I had just signed up for Level I and left right after I got my CFA Charter. Five years (1 fail, 1 year off for baby). That is probably too long. I was older though and needed to have some stability and a CFA on my resume before trying to break into security analysis. If you are younger and haven’t worked at a bunch of places, 2-3 years looks fine on a resume and should be enough time to get to Level III or get the charter if you don’t have a family to worry about.
Oh also - ask your current bosses how many managers they have invested with who underperformed in any prior 1,3, or 5 year period before they invested. My guess is zero. But hey, “we don’t just look at returns”… no, but it’s 95% of what you do.
(Sorry about the late reply, I don’t come here as often as I used to when I was a wee lad taking these exams… do miss some of the witty banter)
OP, I’ve done manager research, and I think i get your perspective. As it is the case for many positions, it’ll be up to you to make the most of it. What you/your team will essentially do is select managers within specific mandates with good performance (at least pre-selection) that you believe will remain consistent given the organization, infrastructure, process, and people behind the strategy.
You will be exposed, depending on your firm’s size and influence, to investing heavyweights and the people that run buy side firms. You will get to explore a good number of investment strategies, understand how portfolios are constructed and run, and you will gain a good understanding of the asset management industry. Also, several of your colleagues will likely be experienced analysts and PMs you can learn from.
Comp likely won’t be as high as FO sell or buy side, but decent, especially for hrs put in. You won’t gain hard skills on the job, as least as far as security analysis, but you may gain solid qualitative skills that can be useful. I’ve seen some move to equity research after a lvl I or II, so it is possible. I don’t particularly like ER as a job, but I’ve leveraged into a role I found much more interesting as well. But prepare yourself for what would likely be an uphill battle if you wish to pursue that route for reasons already mentioned. If you decide to stick around, you could climb the ladder in manager search or eventually progress into FOF/pension/endowment role,
If you’re in FI or certain HF manager search teams, you’ll also gain a good understanding of the macro side of things, and how that influences various asset classes and styles of investing. Pros and cons aside, your attitude will determine how much you gain from this position.
