When you think of an investment manager, many people envision the man in a pin-striped suit yelling commands across a bustling trading room floor that they’ve seen in popular films. Thankfully, when you work in the finance industry, you know that isn’t the case. People in this industry look to investment management as a possible job move as it is an interesting and varied career with a choice of roles that provides the flexibility for people with different skills to find their dream job.
Whether you prefer to work behind the scenes as an analyst or hand in hand with clients to find them the perfect investment to add to their portfolio, there’s something for everyone when it comes to investment management. In this guide, we will help you understand everything you need to know about investment management and why it might be the right path to take your finance career to the next level.
What Is Investment Management?
Investors aim to grow their wealth to achieve a specific goal, and as such, they spend their time researching investment options and reviewing their portfolios. This is a key element of investment management. However, first, they need to decide what to invest in and what level of risk they are comfortable taking on in the context of their overall goal. In order to do this, they need to consider their time horizon as well as how much risk they can take with their initial capital. This is where investment managers come in as they provide advice, solutions and products which are designed to help clients to deliver the outcomes that suit their goals.
Investment managers identify new ideas for clients and are able to quantify the risk and return potential of these ideas through research into current markets and how they are projected to change. Once clients make decisions based on the advice of the investment managers, the investment managers will structure the investments appropriately within portfolios, diversify risk and target opportunities. Finally, they will help clients to define reasonable objectives before providing access to specific investments that represent a good match for investors’ goals.
Working With Investment Clients
The investment management market is vast, and as such there are many roads that you can go down. For example, you could work in a specific niche, such as investment for families or children. Alternatively, you could support large investment portfolio owners or even work with large institutions or governments.
Large-scale companies typically expect complex and sophisticated solutions to meet long-term business goals, such as a defined benefit pension scheme where an institution will aim to provide a large pool of members with a specific income in retirement by a specific future date. Long-term goals such as these require a complex investment strategy that will deliver cash flows to pensioners on time while also protecting and continuing to grow capital in order to meet the income needs of future pensioners. This type of cash flow for a future return is referred to as the liability and typically will only be partially funded by the institutional sponsor, which means it is the investment manager’s job is to close the gap between these assets and future liabilities during the client’s time horizon.
What Are The Different Types Of Investment?
The scope of opportunity in financial markets is widespread and constantly evolving, with the most straightforward options to invest in often being traditional stock markets, bond markets and property markets. Bond markets are where companies and governments come to raise finance through different forms of loans through the process of capital being provided to institutions by the investors, and investors receive regular interest payments in return. However, bonds have a specific life, and at the end date, the original value is expected to be returned.
Stock markets are where larger corporations raise funds by issuing shares in their company, and the risk profile of a share is typically higher as the value is based on what the market believes a share of those future profits is worth. Although, unlike bonds, there is no fixed life with stocks, and while the potential returns are expected to be higher, there is less capital security.
When it comes to property markets, most investors typically invest in commercial real estate rather than residential property as the value tends to fluctuate less. However, property has an intrinsic value which underpins security and values can shift. As a result, buying or selling property can be a long and expensive process compared to other traditional methods of investment like stock or bond markets where there is an opportunity to buy or sell on a daily basis.
While you will typically work with traditional investments, your clients may also need to diversify their portfolios with alternative investments which fall outside of the traditional norms. For large companies, alternative investments could include a combination of hedge funds, private equity, and alternative credit, whereas, for individual investors, alternative investments may include all of these as well as vintage cars, rare wines, or fine art.
With a wider scope, it can be challenging to learn everything you need to know about alternative investment management in order to provide your clients with the advice they need to diversify their portfolios to match their goals, which is where short online courses come in. Aimed at professionals, these courses can help to advance your investment career in the right direction, which is why it’s worthwhile learning about alternative investments.
How Are The Markets Influenced?
The global markets are influenced by an immense quantity of factors, and each type of investment has different influences. Traditional factors that apply to markets as a whole are typically interest rates, inflation expectations, patterns in economic growth, political change, and currency exchange rates. As an investment manager, you would need to understand the macroeconomic landscape as well. This ensures you can conduct specific, detailed research on industries and companies to learn the influences they have, giving you an accurate view of the risks and opportunities of potential investments for your clients.
Roles Available In An Investment Management Career
In investment management, the investment manager is only one part of the team, which is typically made up of a high-performing and engaging group of individuals working at different levels of responsibility. There are many types of roles available within investment management, including those outside of the finance roles like lawyers, IT specialists, and marketing. However, there are two specialist investment focused roles within investment management which are investment managers and analysts.
Investment managers are primarily responsible for investing the clients’ money in a portfolio of stocks and are highly reliant on the in-depth research that analysts perform, as this provides them with all the necessary information to make an informed decision on how they will invest. Furthermore, investment managers are also in charge of deciding how the fund is constructed, considering issues that influence the overall asset allocation, and looking at the bigger picture. On the other hand, as an analyst, your work would normally involve analysing stocks and viewing their future outlook before circulating this research to the wider team for discussion.
