What is Investment Management?
Investment Management is the professional management of a range of securities: debt (debentures, bonds, deposits, notes and commercial paper; equity; hybrid (preference shares, convertibles, and equity warrants); derivatives (future, options, SWAPS, etc.) and alternative (e.g. real estate REITS). Investment Management encompasses both Asset Management and Wealth Management (also called Private Client Services or Private Wealth Management). For instance, Goldman Sachs has an overall page for Investment Management Associates that discusses joint training for Associates entering Asset Management and Private Wealth Management. Some use Investment Management and Asset Management interchangeably as well.
Asset Management
Asset Management is professional portfolio management of mutual funds and funds of funds (FOFs). A mutual fund has an investment thesis that states the investment objectives found in the prospectus. This investment thesis provides focus (or constraints) for the mutual fund whether by security type, (e.g. debt or equity); region (e.g. global, U.S. or Georgia); industry (e.g. Biotechnology or Transportation); tax-protected (e.g. municipal bonds), index (e.g. pegged to the S&P 500) or many other characteristics. A fund of funds is an investment strategy to hold a mix of funds, rather than a mix of assets, such as target-date funds that shift from equity to debt as retirement draws near.
Wealth Management (Private Client Services or Private Wealth Management)
Wealth Management is professional financial planning, portfolio management and other financial services for ultra-high net worth (UHNW) and high net worth (HNW) individuals as well as for institutional investors (e.g. pension or retirement funds, governments, corporations, foundations, insurance companies, etc.). Higher dollar amounts introduce greater complexity, so the range of services can include various trading, banking, budgeting, estate planning, trust services and tax advantaged strategies.
Firms have differing cutoffs for high-net worth individuals. Mutual fund companies, like Fidelity or Vanguard, have cutoffs as low as $1 million, while Goldman Sachs has cutoffs in the eight figures.
What are common post-MBA Investment Management positions?
Investment banks and asset management companies recruit on-campus for both Asset Management and Wealth Management Associate positions. So, if your career goals are to enter investment management, selecting an MBA school at which investment management firms recruit for Associate positions should be one of the evaluation criteria you use in choosing which MBA school to attend. Often this information is not posted publicly, but you can look at the percentage of graduates (and summer interns) entering investment management on MBA career employment reports. Schools will publish which companies hire students and will often report those firms that recruit on campus.
Asset Management
The summer internship is often important for Investment Management as it is for other fields, such as Investment Banking and Management Consulting. Investment banks and asset management companies often have formal Summer Associates Programs which helps you gain entry into very selective positions. Associates build various quantitative models and platforms to valuate companies and financial instruments. Associates analyze and make recommendations on various asset allocations, investment strategies and investment opportunities while growing expertise in an array of products and industry sectors. Associates also conduct economic research and market/industry analyses or leverage different internal teams depending on the firm’s structure. Associates will also directly assist the Portfolio Manager in everything from balancing the portfolio to structuring synthetic products to developing arbitrage strategies depending gain on firm and fund structure. Ultimately, an Associate position is one path towards a Junior Portfolio Manager or Portfolio Manager position.
Wealth Management (Private Client Services or Private Wealth Management)
Investment banks, asset management companies and financial services consultants all provide Wealth Management services. These companies likewise have Summer Associates Programs, but post-MBA Wealth Management positions tend to be less difficult to obtain than Asset Management positions. Whether a summer of full-time associate you can expect to analyze various asset allocations and investment opportunities and learn about a range of trading, banking, budgeting and tax advantaged strategies for a diverse group of clients.