This article is based on my personal experience as an intern working for a well-known Swiss bank in London. I feel I must begin by pointing out that this piece will probably be slightly biased, since I particularly enjoyed my time there.
First of all, working hours are good. You are likely to start quite early, from around 7AM, but also get to finish relatively early (usually no later than 7PM) given your job is dictated by the market’s opening times. Compared with other banking jobs, I think it is fair to say these times are sensible. Of course, all of this will depend on the kind of market you work on, as well as the team you are working for.
I worked in the Fixed Income department, which is where I discovered the various teams needed for such a department to be successful. Portfolio Managers (PMs) are responsible for implementing investment strategies to manage portfolios on behalf of clients and are divided into different teams (FX, investment grade, high yield, ETFs, etc.). The Quant team works on developing models that either computers can run to return an optimised position, or manual models that a PM uses to make an informed decision on positions he could take. The investor relation team is the equivalent of the sales team, and the data management team works to help PMs get the most up to date data. There may also be more niche teams trying to find alternative investment solutions. I am sure there are many more which I have not mentioned here, but these are the ones I worked with the most.
Like with many banking jobs, you get to work on the trading floor and are close to everyone. This is a great set up – even more so as an intern – as you get to easily walk over to discuss matters with another team or ask them questions. This allows you to understand how everyone works, so you can better understand which area is the best fit for you. Many students will aim to work as a portfolio manager, but I will give a quick description of some teams I interacted with:
· High Yield: portfolio managers focused on bonds issued by corporations. These bonds will have a rating (generally from one of the big 3 ratings agencies, S&P, Moody’s and Fitch) which is below or equal to BB+ or Ba1. These corporations are generally small, or large but with less stable or predictable earnings. Indeed, this implies a bigger risk of default. Portfolio managers will study each corporation which issues a bond they would potentially invest in and look into their financial statements. They will also contact the companies, or make sure to be on investor calls, to understand the company’s business model and its forecast to take a view on whether or not they believe the company will be able to pay the coupons and repay the bond at maturity.
· Investment grade: similar to high yield, this team will focus on corporations considered as less risky, i.e. with a rating above BB+ or Ba1.
· ETF: this team manages portfolios similar - in principle - to funds. These portfolios are made of pools of securities which track certain indexes. These PMs need to exactly replicate the indexes’ performance. This implies a regular tracking of the index and the portfolios securities to rebalance the pool of securities which constitutes the portfolio.
· FX: portfolio managers that invest in baskets of currencies. You would need a good knowledge of global economics, as currencies will fluctuate regularly based on central banks’ policy decisions, events that happen in different countries, etc.
· Quant: This team has a slightly different role and will focus on building models that will create buy/sell signals for portfolio managers. For example, a very simplified model could track a specific security’s price, looking at the rolling average over a few days, months. When this rolling average changes for a certain period of time, this will create a buy or sell signal.
Even as an intern, I was given responsibilities and had to present investment ideas to portfolio managers (and sometimes even managing directors, or the Head of Fixed Income). I believe the asset management industry is more open than the other industries I worked with in finance (M&A or credit for example).
Whilst at this bank, I also discovered that having the CFA was quite important in asset management. For many asset managers, it is even a pre-requisite. It seems however that it is losing its “sparkle” as fewer managers appear to ask for it. The decision to take the CFA will depend on what you are looking for, but I believe it does not hurt to have an additional qualification on your CV (it does take a lot of time and effort over a few years, but I really believe it still helps to get a job).
Another interesting thing I experienced was the regular morning market briefing we had. Very frequently, all the PMs would give their views on the current market and for their specific sector. Everyone would gather around to listen to the briefing and ask questions or give their opinion (mainly the managing directors).
In summary, being an intern in asset management was a great experience, and allowed me to better understand what I was interested in. Asset management is very attractive for quite a few people: the pay is good (not as much as other banking jobs like sales/trading or M&A) and the work / life balance is great. On the downside, you need to reach your performance goals every year for your time to be worth the asset manager’s while. Because asset management is such an attractive industry, it also means it is quite difficult to find a job because many people apply, and those who get the job will tend to stay for quite a while.
Originally posted here: Working as an intern in asset management.
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