How to Become a Portfolio Manager

About Portfolio Manager

A Portfolio Manager is a person or corporate body who manages investments on behalf of his clients as per the client’s needs or directions. Basically, portfolio managers have to decide or select the best assets for investing a client’s money with the motive of providing the best returns to the client. Thus, a portfolio manager essential manages the financial assets or portfolio of a client which may include assets such as debt, mutual funds, stock, equity etc.

Portfolio managers are of two types - discretionary and non-discretionary. A discretionary portfolio manager is a person who independently manages the portfolio of each client while as per the needs of the client. On the other hand, a non-discretionary portfolio manager managers the portfolio as per the directions issued by the client. For both of the cases, a portfolio manager is required to have a written agreement with the client for their services.

Portfolio management is an interesting choice of career in India. The career is best suited for a candidate who has a good understanding of the market and requires an in-depth knowledge of Finance and Accounts. A portfolio manager is required to have good analytical skills and must also be competent to communicate directly with the client in order to understand the client’s requirements as well as provide an explanation of the services.

Eligibility to become Portfolio Manager

Portfolio management is a field regulated by the Securities and Exchange Board of India (SEBI). The body loosely defines the responsibilities that a portfolio manager and the client must keep in mind but does not have any set rules regarding the agreement or the fee that can be charged by a portfolio manager.

Given below are the requirements specified by SEBI for portfolio managers;

• A portfolio manager is required to register with SEBI in order to provide their services or hire employees.

• An applicant applying for registration with SEBI must have a net worth of at least Rs. 2 crores.

• Applicant must deposit Rs.1 lakh as application fee and Rs. 10 lakh as registration fee, which must be paid at the time of issuing of the certificate by SEBI.

• The validity period of the certificate of registration for portfolio managers is 3 years.

• The certificate can be renewed by applying to SEBI at least 3 months before the expiry date and paying a renewal fee of Rs. 5 lakhs.

Educational Requirements for Portfolio Managers

Portfolio management is a dynamic career choice that requires professionals to have a keen eye for detail and a good understanding of markets and finances. In order to become a portfolio manager in India, it has become essential that a candidate have at least the following level of education.

• An undergraduate degree in the field of Finance, Commerce, Economics etc.

• Look for courses such as BBA, BBM, BBS, BMS etc.

• Chartered Accountant (CA)

• Chartered Financial Analyst (CFA)

However, in the current market, it has become essential for candidates interested in taking up portfolio management to have a postgraduate degree i.e. MBA. The following courses are ideal for a career in portfolio management:

• MBA in Portfolio Management

• MBA in Finance

• MBA in Investment Banking etc.

Types of Job Roles Portfolio Manager

Portfolio managers may assume different types of job roles depending upon their chosen client. The clients can be individuals, group of individuals such as families, organizations, corporations. Some portfolio managers may even be hired for particular projects.

Additionally, portfolio managers can be discretionary or non-discretionary. The job roles and responsibilities assumed a portfolio manager is governed mostly by their agreement with the client. The client may specify the type of services desired from the portfolio manager as per their needs.

Portfolio managers are required to be updated with the latest market trends and the financial and statistical tools in order to provide the best advice or services to their clients. Clients specify their needs in terms of the type of investment, areas of investment, expected return, the period of investment, level of risk etc. and portfolio managers select the best assets for investments based on the criteria specified by the client.

Employment Sector/Industry for Portfolio Manager

The field of work for portfolio managers is limited majorly to the financial services industry. However, the industry itself has plenty of niches where there is the scope of employment for portfolio managers and there are plenty of career opportunities in the market. The Banking, Financial Services and Insurance (BFSI) sector is the top recruiting area for portfolio managers. Given below are the employment sectors for portfolio managers in India.

• Asset Management Companies (AMCs); These include companies providing Mutual Fund, ELSS or Debt Management Schemes.

• Portfolio Management Service Providers\

• Investment Banks

• Brokerage Firms

• Banks

• Insurance Companies

Organizations may either hire portfolio managers to manage client assets on behalf of the organization as Fund Managers or may even hire the services of portfolio managers in order to manage and invest their own financial assets.

Top Recruiting Companies for Portfolio Managers

Some of the top companies that recruit portfolio managers have been given below.

• HDFC Mutual Fund

• Reliance Mutual Fund

• Franklin Templeton

• State Bank of India

• Goldmann Sachs

• JP Morgan etc.

Additionally, portfolio managers with more than 5 - 10 years of experience are also inclined to provide individual services or consulting to the clients.

Pay Scale/Salary of Portfolio Manager

The salary of a portfolio manager in India varies according to several factors including competence, level of experience and expertise, number of clients or portfolios managed etc. Your salary as a portfolio manager will also depend on the company with which you are working as some companies tend to provide better salaries but may specify more rigorous requirements than others for hiring portfolio managers. Given below are the details regarding the salary of portfolio managers in India.

• The average salary of a portfolio manager in India is around Rs. 10 LPA.

• The starting salary for portfolio managers can range from Rs. 3 - 6 LPA, depending upon their academic background, recruiting company etc.

• The salaries of senior-level posts in the field of portfolio management can be over Rs. 30 LPA and candidates can also demand salaries upwards of Rs. 50 LPA in this field.

Books & Study Material to Become Portfolio Manager

Given below are some of the best-recommended books that prepare you for the field of portfolio management.

• Behavioral Portfolio Management by Howard C Thomas: Harriman House Publishing
• Security Analysis And Portfolio Management by Kevin S.: PHI Learning Pvt Ltd
• Investment Analysis and Portfolio Management by Prasanna Chandra: McGraw Hill Education
• Pioneering Portfolio Management by David Swensen: Simon & Schuster
• Analysis of Investments & Management of Portfolios by Frank Reilly and Keith Brown: Cengage

Pros of becoming a Portfolio Manager

• One of the most significant benefits and the most prominent reason why people are attracted towards the career of portfolio management is the high salary and earning opportunities.

• Another great advantage that the career offers that it is very challenging and stimulating for an intellectual mind. The career involves learning and new experiences at every stage.

• Portfolio management is also a career that promises unlimited growth, provided that the conditions are stable and the individual is capable to tap into the correct resources.

Cons of becoming a Portfolio Manager

• The career is very hectic and demanding. Portfolio managers usually have to undergo long working hours and have a disturbed work-life balance as a result.

• The field is intensely competitive and requires professionals to work under high pressure in order to maximise profit as well as surpass peers.

• The growth opportunities in the field are linked to the market and there is always a certain level of risk involved.