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SPECIALISATIONS
The Business Careers Handbook 2020
Funds management As a funds manager, you will be rewarded for your abilities. A reputation for managing a fund well – and consistently outperforming set benchmarks – will make you a highly-sought after portfolio manager.
What is funds management? The funds management industry exists simply because people who have money recognise there are others who know more about investing than they do. By giving these managers their money to invest, they hope to earn a greater return on their investment than they could by themselves. Fund managers usually trade traditional investments such as cash, shares and bonds. For example, managers research and buy shares they believe are undervalued in the market, in the belief they will eventually ‘correct’ and rise in value. This selection of shares is known as active funds management. Active fund managers are considered successful so long as they match or outperform a benchmark such as the ASX100. Even if a fund manager makes a loss in a quarter, they are still considered successful if they ‘beat’ the ASX100 – that is, their loss is less than the market’s. Being able to regularly outperform the market though can be tough. This is because, as a funds manager, you must consistently bet (and win) against the consensus of the market – and other funds managers – to be rewarded. Some managed funds are indexed to the market and known as exchange traded funds (ETFs). ETFs are more passive and based on the belief that it is near impossible to get a better return than the market over time. As less ‘active management’ is required, these funds cost less to invest in. www.gradaustralia.com.au
Superannuation funds represent some of the largest clients of funds managers. As superannuation is compulsory in Australia, superannuation provides a ready pool of funds for investment. What is the graduate experience like in funds management? Most large banks run funds management and superannuation programs, for example, Commonwealth Bank’s Colonial First State. Other key players such as AMP and Perpetual also offer graduate programs. As a graduate, you will learn how to manage a portfolio – including researching stocks, making investment decisions, monitoring the markets and communicating findings. Depending on the size of the organisation, each of these tasks may have a specialist team. As a graduate, you will likely rotate through these teams before deciding which to settle in. As a researcher or buy-side analyst, your task is to determine which securities to buy for the portfolio. Often you will focus on a specific industry, region or type of product and be expected to run financial models to determine how they might perform in the portfolio. Being able to communicate these findings to your manager and team will be a critical part of the role. You may also be expected to write reports or develop presentations to communicate investment results. There is a fair amount of independence on the job, although you will be part of a team. Within the team, you may be allocated
a specific task or stock to follow and required to generate a regular performance report for your portfolio manager. What are your career prospects in funds management? As a funds manager, you will be rewarded for your abilities. A reputation for managing a fund well – and consistently outperforming set benchmarks – will make you a highly soughtafter portfolio manager. You may choose to advance to senior levels, or alternatively even start your own managed fund. As funds management organisations are often affiliated with a commercial bank, there is scope to move into other areas if you decide to move beyond funds management. As a funds manager, you will develop a deep understanding of and expertise in financial markets, and also execute trading strategies. These are valuable transferable skills. Further training is often available, including support to become a Chartered Financial Analyst (CFA). Choose this if you have: ■ Excellent quantitative, numerical and critical thinking skills ■ Strong communication and interpersonal skills ■ An intellectual curiosity about financial markets and organisations.
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