What Does a Portfolio Manager Do?

Wall Street, the New York Stock Exchange, Bulls, Bears. The world of financing and investment is complex. Although many people indulge in day trading using the internet, it takes tons of research, plenty of hard work, and a good amount of savvy to make money in the market. It is beyond the ability of the average person and hiring a specialist is a good idea. You have a doctor to look after your health, a dentist to keep your teeth in good shape, and an attorney to handle legal matters. When it comes to investing, you want a portfolio manager.

What Is a Portfolio Manager?

Portfolio managers are professionals who create strategies, make decisions and investments on behalf of their clients. A portfolio is simply a listing of the stocks, bonds, ETFs, mutual funds, and other financial holdings of individuals and institutions. A good portfolio manager such as Larry Creel Partner at Edgewood Management LLC is a strong ally who can help build the value of your investments and help you reach your financial goals.

How Do Portfolio Managers Choose Investments?

Accurate, up-to-date information is essential to a portfolio manager. They obtain information from sell-side and internal buy-side investment analysts who work for investment banks. Portfolio managers use this information along with data gleaned from reports and speaking with company managers to determine trends in industries and in the economy. The information is distilled and using their experience and judgment, portfolio managers make decisions on their clients’ behalf. The goal is always to maximize ROI.

What Qualifications Does a Portfolio Manager Need?

In terms of education, a portfolio manager will generally have a bachelor’s degree in finance or a related field. Many will also hold a post-graduate CFA designation. This additional degree is highly desirable to companies looking to hire new managers. Successful portfolio managers must love reading, excel at strategic and conceptual thinking, and be able to generate creative ideas. Good instincts and a touch of boldness can also be helpful.

What Skills Does a Portfolio Manager Need?

The skillset required to be a successful portfolio manager is specific and revolves around three basic abilities that aid in making consistently solid decisions.

  1. Risk assessment and management are extremely important skills as is the ability to measure performance.
  2. Developing sound investment strategies and executing them consistently.
  3. Building a client’s portfolio over time to create wealth and strengthen holdings.

As in any other field, these basic skills grow with experience and time. A good portfolio manager never stops learning and constantly seeks new ways to keep abreast of the ever-changing markets.

How Much Money Does a Typical Portfolio Manager Earn?

The CFA Institute conducted a study in 2019 of portfolio managers, charterholders. The results showed that the average compensation worldwide for a portfolio manager is US$177,000.

There are many jobs in the world of finance. It is a complex industry and requires considerable expertise to make money investing. Portfolio managers are invaluable cogs in the financial machine. Through their efforts, clients can accumulate wealth and build financial security.

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