What Does a Portfolio Manager Do?

Kaplan Schweser

Portfolio managers are finance professionals who manage investment portfolios. Depending on the type of portfolio management job, a portfolio manager could work for individual clients or as part of a larger firm or financial institution. This article explores the day-to-day life of a portfolio manager and the types of potential portfolio manager jobs available.

What Portfolio Managers Do: The Basics

Portfolio managers spend a lot of their days researching current events and financial markets. Portfolio managers meet regularly with analysts to discuss the implications of market developments and current events. Both buy-side and sell-side analysts from investment banks present investment ideas to portfolio managers. The portfolio managers then need to sift through the information and make decisions about what securities to buy and sell.

Not only do portfolio managers need to make investment decisions, but they are also responsible for meeting with investors, both in person and via phone or email, to explain their research, strategy, and rationale for decisions. There is also a large maintenance component of portfolio management. Adding an investment to the portfolio is not the end of the work for the manager. Portfolio managers must continue to pay attention to the portfolio companies and investments well after they are made and recognize when to hold or sell.

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Specializations in Portfolio Manager Positions

Portfolio managers often specialize in particular areas of investing. The following are a few different types of specializations commonly seen in portfolio management.

Size of Fund: Portfolio management jobs can vary considerably based on fund size. Some may manage assets for small independent funds, while others will work for large asset management institutions. Some portfolio managers manage the capital of a large institution, such as a bank or a university with a large endowment.
Type of Investment Vehicles: While all portfolio managers manage assets for their investment vehicles, the range of vehicles varies greatly. These could include mutual funds, institutional funds, hedge funds, trust and pension funds, and commodity and high net worth investment pools. It is common for a portfolio manager to specialize in either managing equity or fixed-income investment vehicles.
Investing Style: Portfolio managers can also specialize in styles of investing. Some portfolio managers are specialists in hedging techniques, growth or value style of management, small or large cap specialties, and domestic or international fund investing.

Portfolio Management Skills for Success

Portfolio managers have big decisions to make and numerous reports to analyze every day. There are a number of skills necessary for success in the portfolio management sector, but here are four of the most important:

Innovative: All portfolio managers look at the index and news. The exceptional portfolio managers do outside-the-box research and know where to find information on potential investments that others do not. There is tremendous potential payoff for investors who can find a good investment that others failed to see.
Critical Thinker: Analyzing reports from financial analysts and other research requires portfolio managers to have strong critical thinking skills. Portfolio managers must be able to think through strengths, weaknesses, opportunities, and threats for every potential investment decision.
Decisive: Being a portfolio manager means making many investment decisions. There will never be any certainty in this industry; therefore, it is important that portfolio managers are good at evaluating options and making confident decisions.
Experience: Becoming a portfolio manager requires first working as a financial analyst and gaining important investment experience. The research analysts do informs the decisions portfolio managers make. Gaining experience as an analyst will help individuals better understand the life of a portfolio manager and see if it is a potential good fit.