INVESTMENT MANAGEMENT: FUNCTIONS
MANAGER SELECTION
BY: MAHA KHAN PHILLIPS
PROFILE BY: STUART NEWMAN
M
anager selection and research runs across the whole Manager researchers must be analytical and numerate. Th ey
investment industry. Whether you’re a multi- deal with a large amount of information, and they must be
manager, a hedge fund of funds, a private equity able to sort through it quickly. Th ey have to have strong verbal
fund of funds, or an investment consultant, you’ll need to and written communication skills, and an ability to see
build a knowledge and understanding of the investment through “what managers are saying, and what they are actually
management marketplace and its funds. doing,” according to one research analyst. Th ey must also build
Candidates must decide which area of the business they relationships with the fund managers they are covering. Th ey
want to focus on, and then build up a speciality. Like an must be able to stick their neck on the line slightly, and argue
investment analyst, research analysts will be given a universe about whether a manager or fund should be saved, or dropped,
of managers or funds which they are responsible for. Th ey will from a portfolio if performance has been poor.
look at valuations, results, performance, operations, and Analysts must also understand trends in the marketplace,
overall investment capability. Th ey will produce quarterly and put their research in context. If a fund fares poorly, it is
reports and provide continuous monitoring, focusing on a important to know if it is because the marketplace as a whole
variety of factors that aff ect a fund’s future performance, such has tanked, or whether it is circumstances at that particular
as its approach to risk management and how it infl uences the fund. Th ey must have a strong understanding of corporate
fund’s investment and its operations. fi nance and portfolio theory. In general, research is a good
Analysts working for managers-of-managers and springboard into other areas of the profession.
consultants will often interview everyone from the chief Much of the role depends on the company that a candidate
executive to the person responsible for technology, at diff erent will work for, and the demands being placed on it. At the
points during the process, and they will decide whether good moment, consultants are being asked to look at non-
performance is sustainable over the long term, or whether it is traditional asset classes, and there are opportunities for
a result of factors that are not replicable in the market. candidates with knowledge in this area. Th e value of assets
placed through Mercer’s manager search activity totalled US
PATRICK EGAN, CFA
$76.3 billion in 2007, with global equity and real estate being
the most searched product categories.
Title: Research Analyst Mercer’s 2007 Manager Search Trends report revealed that
Current employer: Russell Investments searches in alternatives are up by approximately 20% across
Previous employers: Barclays Wealth the world, based on Mercer’s own manager search trends.
Cg
Universities: Ateneo de Manila
University; London Business School
Degrees: Bachelors in Management
Engineering; Masters in Finance
bring about. Managing information is also a challenge – be it in
Professional qualifi cations: CFA
terms of processing portfolio holdings and performance or keeping
track of changes to organisations or investment staff.
What attracted you to this career path?
Manager research is an extremely stimulating profession. One gets to Are there certain skills you would consider useful for your job?
meet some of the best investors in the world and spend time with One needs to posses both technical and soft skills. On the former,
them discussing their investment philosophies and views on markets. one needs a broad understanding of corporate fi nance, capital
However, it is also a challenging profession. There is a low correlation markets and portfolio theory. Soft skills are important since
between past and future investment performance so both skill and ultimately, one invests in people and has to be able to recognise
effort are required in selecting managers who can beat the market characteristics such as drive and motivation (or lack thereof).
and in combining them in an effective and effi cient manner.
How do you think the role you’re in now will change over time?
What are the major challenges you face in your position? In the future, knowledge of psychology could become more
Manager research analysts have to understand both the merits and important in researching investment managers. There is always
potential pitfalls of a multitude of investment strategies (many of further scope for improvements in quantitative tools.
which have fi nite life spans). Additionally, asset management is an
evolving industry so one has to be able to recognise what Do you have advice for someone intending to pursue the same
implications any new academic or technological developments career path? Understand the industry. Meet practitioners.
WWW.CFAUK.ORG CAREERS GUIDE 2009 33
330-55 investman_functions.indd 330-55 investman_functions.indd 33 222/11/08 11:59:282/11/08 11:59:28
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