How to Become a Successful Portfolio Manager?

1x1.trans How to Become a Successful Portfolio Manager?

I hope you have been finding all my articles engaging and interesting.

I have already written a lot of articles about investment banking, private equity, equity analysis and finance career.

This time I am going to write about the exciting world of portfolio management.

First lets stat by understanding – What exactly is Portfolio Management? But before that let me clear the meanings of the terms -‘Portfolio’ and ‘Management’


A portfolio is a collection of financial instruments like company shares, equity stocks, financial bonds, debt instruments issued by companies or by governments, mutual funds, sovereign bonds, cash equivalents such as gold, etc.

It is important to have a mixed portfolio as it helps to spread the risk of non-performance of various financial instruments.


Management means the organization and harmonization of the events of an organization in accordance with predefined plans and achieving its pre-set objectives.

So now that we are clear as to what portfolio and management mean, let’s understand what portfolio management means.

Portfolio Management

Portfolio management means guiding your clients in the selection of the best available financial instruments that will provide the best possible projected rate of return for the risk taken and also to mitigate the risks.

It is typically a tactical judgment which is taken by the top-level managers.

Objectives of Portfolio Management1x1.trans How to Become a Successful Portfolio Manager?

I have provided the main objectives of portfolio management below which will help you understand the profession better:

#1. Safeguard of the initial investment

Reduction of risks is one of the key purposes of portfolio management.

Portfolio management not only includes keeping the initial investment safe and sound but also looks at its growth over a period of time.

The key aim of financial portfolio management is to make sure that the initial investment is safe.

Secondary issues like earnings, growth, etc. are considered only after the safeness of the initial investment is safeguarded.

#2. Portfolio should be able to generate stable Returns

Another objective of effective portfolio management is to ensure stable returns by reinvesting the earnings in lucrative and good portfolios.

But you have to remember the most important thing which is to make sure that the earned earnings must be able to reimburse the opportunity cost of the capital that you have invested.

#3. Growth of the initial investment

A key thing that you have to ensure as a successful portfolio manager is to guarantee the growth of the initial investment by reinvesting in attractive financial instruments or by purchasing of new financial instruments.

You have to ensure that as a portfolio manager you should make sure that the portfolio must grow in value, to protect the client from any corrosion in purchasing power because of inflation and other economic aspects.

Hence make sure that the portfolio consists of investments that tend to grow in value after adjusting for factors such as inflation.

#4. Contents of the portfolio should be liquidity

 Your portfolio must constantly make sure that there are sufficient funds accessible at a quick notice to address the client’s immediate liquidity requirements.

You need to plan your portfolio so that it enables you to take maximum benefit of various good opportunities in the market.

#5. Contents of your portfolio should be marketable

Always make sure that your portfolio contains such financial instruments that can be marketed or traded easily.

Make sure that your portfolio does not contain too many unlisted or sluggish shares, as that could lead to problems such as not being able to trade like switching from one financial instrument to another.

So it is always suggested to invest in only those financial instruments that are listed on key stock exchanges and also those which are traded actively.

#6. Portfolio should be diverse

Your portfolio should always be diverse with various different types of financial instruments. You should have a good mix of high risk and low risk financial instruments.

For example government bonds are practically least risky while equity shares of lesser known companies are the riskiest.

Remember that higher the risk, higher will be the returns and lower the risk, lower will be the returns.

So make sure that you have a good blend of various types of financial securities.

Your portfolio should be designed to reduce the risk of loss of initial investment and earnings by investing in various types of financial instruments available in a wide variety of industries.

#7. Minimizing tax burden

An effective portfolio manager must always try to give a favorable tax shelter to his clients.

By reducing the tax burden, net earnings can be efficiently improved.

The portfolio must be properly assessed after considering various taxes such as income tax and capital gain tax.

If you consider the above objectives carefully, they can result in a suitable analytical approach towards the development of the portfolio.

But always remember that general risk needs to be sustained at tolerable levels by creating a balanced and effective portfolio.

Where Can You Get Portfolio Management Jobs?

You can typically get a portfolio manager job with fund management firms,hedge fund firms, and fund management arms of big banking corporations,independent money funds, pension fund companies and insurance companies.

Though bigger hedge funds and fund management firms are huddled in large financial capital cities like New York, Tokyo, London or Mumbai, portfolio manager jobs can also obtainable in other smaller locations with a decent presence of financial institutes. For example smaller cities such as, Kansas City, Los Angeles and Baltimore have big fund management firms and hedge fund companies and offer many jobs to portfolio managers.

How to Get a Portfolio Managers Job?

The first thing I would like to say is that you have to be patient if you want to be a successful portfolio manager. You won’t get to manage large portfolios to start with at the beginning of your career. That’s wrong expectation!

Remember that most successful portfolio managers also did not get a chance to begin in that role but they worked their way towards improving their knowledge and experience and then managing large portfolios successfully.

What you would typically need to get a portfolio managers job is a college graduation degree.

A chartered financial analyst (CFA) degree is also very common among portfolio managers.

Best way to slide into portfolio management is to work as an investment analyst for a number of years and learning to scrutinize different equity stocks and other financial instruments.

Rather than changing roles, most portfolio managers progress by managing larger and larger funds, or even by ultimately starting their own fund.

All portfolio managers manage client portfolios and typically have eventual responsibility for all facets of portfolio construction and the customer relationship.

In some organizations, portfolio managers could be accountable for distinct accounts in which each customer has his individual account style and holdings. While in other organizations, portfolio managers might be responsible for consolidated accounts where the assets of multiple customers are combined and managed as a whole.

Another difference could be the extent of client engagement the portfolio manager is involved in.

In some companies, a portfolio manager might have a decent quantum of customer contact, especially with larger customers. But in some other companies, a portfolio manager could have less contact with customers, in its place concentrating nearly most of their time on the portfolio.

Most portfolio managers concentrate in a solitary asset segment such as fixed income or equities.

Even inside these various asset segments, some portfolio managers are more focused.

Portfolio managers who manage these focused funds could come from a research analyst background where they earlier concentrated on scrutinizing the same types of financial securities they are now managing under their portfolio.

But let me warn you – similar to almost most finance related jobs, most portfolio managers end up working for long hours, and the pressure to perform is usually quite high.

In fact a portfolio manager’s role could be among one of the most demanding in the finance domain as constantly the portfolio manager’s performance is compared to their competitors as well as the market benchmark.

If a particular portfolio manager under-performs for a long period of time, most likely he will end up losing his job.

But typically the compensation that a portfolio manager gets could make the stress and long hours of work worth it!

Successful top-level portfolio managers can earn big remunerations as well as bonuses, and also the respect and the appreciation of their customers.

Especially on the buy side, getting a job as a portfolio manager could be the high point of a person’s career objective. But once having reached that top, the real test begins as the portfolio manager should then concentrate all of his energy on outdoing the market every time.

But key thing you have to remember friends is that for being successful as a portfolio manager, you need to be in absolute love with the financial markets.

You should be dreaming shares and stocks instead of movie actors and actresses! You have to have absolute passion for this kind of work as it can be extremely stressful otherwise.

I hope you have understood the world of portfolio management and what you need to do to get into this high profile job. Do give me a shout if you have any queries or need any help.

The Definitive Guide to Portfolio Management Jobs

So, you want to know everything about portfolio management jobs?

You’re on the right page.

Portfolio management is the process of managing assets and investments. The main objective of portfolio management is to make the largest returns possible on original investments.


The main duty of a portfolio manager is to accommodate clients’ risk tolerance with their investment goals and objectives. These professionals strive to attain optimum returns given the amounts of acceptable risk.


Effective portfolio management ensures that clients’ investment goals and objectives are met. For example, if the goal of a client is asset protection, portfolio managers will invest in conservative, low-risk securities.

On the other hand, if a client needs current income, portfolio managers will invest in income-generating securities such as bonds. Generally, younger clients prefer to invest in high risk securities because of their long-term perspectives.

Portfolio Management Techniques


1x1.trans The Definitive Guide to Portfolio Management Jobs

Passive and Aggressive

There are two main types of portfolio management strategies: passive and aggressive.

Using either of the two strategies does not require great deal of knowledge about investment markets. The main goals of the two strategies are diversification of assets, cash cycles, industry, assets and duration.

Passive and aggressive investment portfolio techniques rely on alternating price points.

The main features of the passive strategy are that it assumes that the market is highly efficient and has return goals equal to the market. On the other hand, an aggressive strategy assumes that the market is highly inefficient and therefore, portfolio managers must strive to make returns above the market.


The type of strategy a portfolio manager will use is determined by the type of information he/she has.

Active portfolios use available information from industry reports and performance indicators to seek out more information. Passive portfolios are composed of well-known value stocks that pay dividend.

A passive portfolio relies on markets with solid yields. Aggressive portfolios take on riskier investments because they aim at generating greater returns than the market.


Success of a portfolio management technique is largely determined by self-discipline.

Value-oriented, low risk investment portfolios are usually more successful than those that try to take advantage of short-term market anomalies. Your investment character is defined by your adherence to chosen strategies when markets move against your techniques.

What You Need to Do to Become a Portfolio Manager


Enroll in a portfolio management program in college. Most portfolio managers have a bachelor or master’s degree in economics, accounting, finance or business administration.

Try to establish relationships in companies located in larger cities and financial centers such as New York City, London and Tokyo, because most investment firms are headquartered in countries’ financial hubs.


Gain work internship to improve your analytical skills. One of the best ways to begin a career in portfolio management is to complete an on-the-job training program to familiarize yourself with securities analysis past your university education.

Once you complete the program, you may obtain a job as a securities analyst and specialize in specific geographic regions or investment products. Your success as an investment analyst will determine whether you will be promoted to the post of portfolio manager.

Portfolio Investment

Seek advanced training after a few years’ work experience. Many financial managers seek certifications such as the Chartered Financial Analyst (CFA), sponsored by the CFA Institute.

The most distinct benefit of this charter is that it is a professional designation recognized all over the world. This is a securities designation to aspire if you plan to become a portfolio manager.

According to the CFA Institute, the Chartered Financial Analyst designation is the most respected and recognized designation for securities analysts. Unlike college degree programs, you can keep working and furthering your CFA education because it is a self-study program.

Advanced Work Responsibilities

Seek advanced recognition at work. You need to have advanced educational credentials and work experience to be promoted to the post of portfolio manager.

You are your own best advocate when climbing the corporate ladder. With this in mind, negotiate promotions and responsibilities when necessary. Added responsibilities mean longer hours and extreme competitiveness.

Duties of a Portfolio Manager


1x1.trans The Definitive Guide to Portfolio Management Jobs

Supervise Analysts

A group of financial analysts works under a portfolio manager to study the market and identify investment vehicles.

One of the duties of portfolio managers is to meet regularly with the financial analysts to discuss and design investment strategies.

Strategize and Prioritize

Portfolio managers may come up with many investment strategies. However, the most important factor in the success of an investment strategy is whether it will advance the objectives of the company.

It is the responsibility of the portfolio manager to analyse investment strategies and decide the projects and plans that will advance the objectives of the company.

Other duties of portfolio managers are to prioritize each investment vehicle, allocate resources and plan implementation.

To succeed in portfolio management, you must maintain perspective when implementing strategies and always act in the best interest of your company’s long-term financial plans.

Manage the Bottom Line

Many commercial banks and financial institutions hire portfolio managers to decide how to invest in securities such as bonds. These portfolio managers also ensure that depositors are paid interest that is proportionate to interest earned from loans.


Good portfolio managers keep abreast of market conditions and try to adapt accordingly. For example, if you work with stocks and funds, you may be required to make split-second decisions to adapt to market shifts.

It is your responsibility as a project manager to remain flexible and creative while continuing to advance your company’s long-term financial objectives.

Investment Portfolio Management Guidelines

Asset Allocation

This is one of the most important components of investment portfolio management. The main goal of asset allocation is to manage risks effectively. Aggressive portfolios can have about two-thirds in stocks and the rest in bonds.

Today, many portfolio managers will advise their clients to place about 10 percent of their portfolios in gold and silver as well. The objective is to diversity investment by allocating resources to unrelated investments.

The underlying reason for allocating resources to diversified investments is to cancel out losses and protect gains made in other segments.

Investment Goals

Your investment portfolio management guidelines are partly determined by your investment goals.

Aggressive goals will have less stringent guidelines.

Clients saving for retirement in about 20 years will put more emphasis on risky investments like stocks and commodities. Older clients will probably want investment portfolios dominated by fixed income debts to ensure steady incomes with limited downside risks.

Many people favor long-term federal debt because they are relatively safe investments.

Trading Techniques

Short-term investment portfolios use different strategies than those used in long-term investment portfolios.

Short-term investment portfolios can lose a large percentage of their capital because they are filled with leveraged investments. Investors are advised to exit their losses early to prevent significant losses.


This is an important risk management strategy in portfolio management. Hedging refers to the process of buying opposite position on the same or correlated asset for each investment.

The Compensation & Salary for a Portfolio Manager

Average Salary and Compensation

According to, the annual average salaries of portfolio managers are between $60, 524 and $115,410.

In addition, they can earn annual bonuses between 8.5 percent and 30 percent, commissions of between 7 percent and 13 percent as well as profit sharing of between 5 percent and 13 percent. Consequently, you can earn a total annual income of between $72,723 and $180,713 as a portfolio manager.


Portfolio managers with significant experience can expect to earn higher salaries. For example, according to, portfolio managers with less than a year’s experience earn annual salaries of between $45,663 and $68,784.

Portfolio managers with 1 to 4 years’ experience can earn yearly salaries of between $45,827 and $71,464.

If you are a portfolio manager with 5 to 9 years’ experience, you can earn annual salaries of between $64,105 and $100,965.

After 10 to nineteen years working as a portfolio manager, you can expect an annual salary of between $81,776 and $132,494. Portfolio managers with the highest salary expectations are those who have more than 20 years’ experience in the field. They can expect an annual salary of between $82, 379 and $135,873.

Salary by Industry

The salaries of portfolio managers can be determined by industry. According to, portfolio managers in the investment fund industry are the highest earners with annual salaries of between $92, 710 and 157, 386.

The second highest earners are portfolio managers in asset management with annual salaries of between $72,193 and $133,867. Other high earners are portfolio managers in fund management or trust companies earning annual salaries of between $57,990 and $122,815. The lowest earners are portfolio managers working for commercial banks who earn between $50,958 and $77,226 per year.

Salary by State

Salaries of portfolio managers vary widely by state. According to, the annual salaries of portfolio managers in:

  • Massachusetts – $72,929 to $146,291
  • New York – $75,858 to $134,922
  • Illinois – $63,392 to $134,498
  • California – $63,931 to $124,526
  • Texas – $63,486 to $105,603
  • Florida – $54, 988 to $103,706
  • Ohio – $51,518 to $98,939

Portfolio management goes against the classical security analysis approach by constructing a collection of investments through asset allocation and diversification.

One of the biggest challenges in securities trading is the uncertainty of investments’ future performance and the risk of potential losses.

However, effective portfolio management prevents losses by cancelling out different investment returns among investment components.

Image: bravercapital dot com

Author Bio:Tammi Rogers writes for Blueprint Wealth Financial Planners in Perth, Western Australia. Have a question on something within this article? Connect with Tammion on Google+ to discuss!

How to Get into Portfolio Management –Part I

Portfolio management involves deciding what assets to include in the portfolio, given the goals of the portfolio owner and changing economic conditions. Selection involves deciding what assets to purchase, how many assets to purchase, when to purchase them, and what assets to divest. Read more »