Role of a Portfolio Manager and How to break into the Industry?
February 10, 2025
What does a “Portfolio Manager” do?
The Portfolio Manager job title is one of the most desired in the financial services industry. It is a role that can be very interesting and dynamic, but also quite demanding in terms of knowledge, time commitment and has very high entry requirements. Portfolio managers are responsible for the management of clients’ funds (these could be retail, high net worth, or institutional). They are in charge of the investment management process – from idea generation and security selection to the ongoing monitoring of investment portfolios. Typically, a portfolio manager would head up a team of investment analysts who feed ideas into the process and support the investment decision-making by producing in-depth reports and proposals.
Key Learning Points
- Portfolio managers are responsible for the management of investment strategies on behalf of their clients
- They normally head a team of investment analysts that help them identify investment opportunities
- Portfolio managers work for a variety of companies, for example, asset management or hedge funds
- Typically starting their career as junior analysts, portfolio managers dedicate a lot of their time to do further studies and gaining additional professional qualifications
Types of Portfolio Managers
Portfolio managers could work for a variety of institutions, for example:
- Asset management companies
- Banks
- Insurers
- Pension funds
- Wealth management
- Endowments
- Hedge funds
- Private equity
- Sovereign wealth funds
Usually, a portfolio manager would have a specific area of focus, on an asset class or geography level, where he/she has a strong knowledge and experience. In addition to that, portfolio managers are also focused on staying up to date with current regulations that might impact their strategy.
Example
George is a portfolio manager for ABC Asset Management and runs a fund investing in Large Cap UK Equities. His objective is to deliver returns for his clients in excess of a predetermined benchmark index (for example the FTSE 100) over a specific time frame. He is in charge of shaping the investment strategy for the fund, what is going in and out of the portfolio as well as managing the investment risk.
Career Path
Becoming a portfolio manager would usually require gaining a lot of experience within a specific area of the market – in this case, large cap UK equities.
Junior Analyst/Analyst
The typical entry-level position is junior analyst or analyst (this depends mostly on the company and team’s size). Analysts are responsible for researching new investment opportunities by performing both quantitative and qualitative analysis.
Senior Analyst
Senior analysts usually have a few years of experience with the team and are very familiar with the investment philosophy, process, and universe. They generate ideas, cover securities included on a “watch list” and maintain up-to-date recommendations on portfolio companies.
Deputy Portfolio Manager
Deputy portfolio managers support the lead portfolio manager in research, but also with activities related to portfolio management. They typically spend a few years on the team and would have previous experience as either a senior analyst or deputy portfolio manager elsewhere.
Portfolio Manager
Portfolio managers are the key professionals responsible for running a specific mandate/strategy/fund. Their responsibilities include security selection, portfolio construction, risk, management, and ongoing monitoring, as well as portfolio rebalancing and optimization.
Education and Qualifications
Portfolio managers are usually highly qualified and hold a number of qualifications alongside their academic degrees. A Bachelor’s degree in finance, economics or a numerical subject is often essential, but most portfolio managers also hold a Master’s degree or an MBA. In addition, they take a number of exams with professional bodies that can further demonstrate their knowledge and professionalism. Some of these include the Chartered Financial Analyst (CFA) Institute and the Chartered Institute for Securities and Investment (CISI).
In portfolio management, financial certifications are a great way to demonstrate competence and dedication. The Portfolio Manager certification is designed for those working in portfolio management or looking to break into the asset management industry with the goal of becoming a portfolio manager. The course is comprehensive, covering the fundamentals of the buy-side and advanced portfolio construction, as well as an expert interview with a wealth manager.
Key Skills Required for Portfolio Management
Some of the key skills required for a successful career in portfolio management include:
- Strong financial modeling skills
- Strong writing skills
- Strong relationship management and presentation skills
- Great knowledge of financial markets, asset classes and risk
- Ability to assess the potential for return on an investment’s
- Critical thinking from a macro and micro-economic perspective
Salaries in Portfolio Management
Salaries vary widely between different organizations and are dependent on the firm’s size, the type of fund, and the individual’s level of seniority. Compensation for portfolio managers includes a base salary and a performance-related bonus.
Analysts may be compensated for the performance of their stocks, while portfolio managers on the performance of their strategy. The table below shows the estimated salary for a portfolio management career path.
| Position | Base Salary in USD | Bonus in USD |
| Analyst | $70K – $90K | $20K – $40K |
| Senior Analyst | $90K – $120K | $40K – $60K |
| Deputy Portfolio Manager | $120K – $200K | $80K – $100K |
| Portfolio Manager | $300K – $500K+ | $500K+ |
Pros and Cons of a Career in Portfolio Management
Typically, turnover in the asset management industry as a whole is much lower than in investment banking given the more attractive balance of personal life and compensation.
Given these benefits competition for jobs in portfolio management is high, the number of roles is limited, and demand for roles is high as many investment bankers and hedge fund professionals see portfolio management as a good exit opportunity.
Conclusion
Portfolio managers are responsible for the management of investment strategies on behalf of their clients, and can work for a variety of companies, including asset management firms or hedge funds. Successful portfolio managers have a range of skills including the ability to assess the potential for return on an investment, critical thinking, and a great knowledge of financial markets, asset classes and risk. Portfolio managers also need strong relationship management and presentation skills.
Additional Resources
Portfolio Management Certification
Portfolio Management Interview Questions