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Career Opportunities In Investment Management
During last decade the service sector has grown significantly. The service sector as a percentage of GDP has touched a figure of 64.55% in the year 2008 – 09 from 55.40% in 1998 – 99.
In service sector itself, financing, insurance, real estate and business services contribute 22.89% in 2008 – 09 which reflects the relative performance of this sector.
With the increasing scope of finance services, number of banks, financial institutions and investment institutions have emerged which are involved directly or indirectly in the investment activities through stock market.
Also, increased awareness among the retail investors has witnessed an upsurge in the IPO investment in the recent past. In view of these facts, stock market or capital markets have lot of scope for the skilled human resources to capitalise the potential.
Investment is the most important dimension of capital formation in addition to savings and consumption. In the service led growth of India, investment management plays an important role in designing the financing needs of the corporate, government, public sector undertakings and public as a whole.
Recently a trend has started to get funds from the public by some state run organisations for their expansion, diversification and modernisation strategy in consonance with the privatisation of PSUs.
The process of going public is not so simple and it involves technicalities, formalities and complex processes. Corporate entities and PSUs have to take consultancy of the expert agencies in investment management.
Investment Management : Dimensions and Scope
There are various dimensions of investment management. Investment management involves analysing the risk and return of financial assets particularly securities listed in stock markets, mutual funds, ETFs, derivatives, currency derivatives, commodity derivatives, portfolio investment held by the companies, banks, financial institutions, PSUs and HNIs (High Net worth Individuals) etc.
Aside from it, investment management includes; advice and consultancy to the clients (institutional and retail), facilitate trading through brokers, carrying out market transactions on their behalf, periodic analysis of investment of their clients, coordination with market regulators, corporate financial management, international financial management, forex (foreign exchange management) also involve investment decisions by the analysts.
In stock markets, the analysts are involved in technical and fundamental analysis for their share brokers, clients, portfolio management companies, Asset Management Companies (AMCs). Based on this analysis, investment decisions are taken by individuals and brokers.
Career and Nature of Jobs in Stock Market
Stock exchanges are places where stockbrokers buy and sell securities for individuals or institutions. They facilitate the trading of financial securities including shares, debenture, bonds, ETFs, mutual funds, derivatives etc.
There are various participants of stock market. These include; stock brokers, investment analysts, traders etc. If you are an MBA in finance with investment management as one of the specialisations, then a career with some investment, portfolio or consultancy firm will welcome you.
Not only you can get handsome salary package but also act as consultant with a firm of repute. Independent consultancy is also a career option for you.
There are 23 stock exchanges in India. The related Job options available with these exchanges are; regulatory bodies, financial institutions, foreign institutional investors (FIIs), financial planners, investment specialists, brokerage and merchant banking divisions of banks.
Some career positions available in stock market with their job profile are as follows :
Fundamental Analysts are required by broker firms and investment organisations for analysing the companies past financial and operational performance based on strong analysis of performance ratios, market potential, profitability, financial position, financial ratios, balance sheet and competitors’ position etc.
Similarly Technical Analysts are required by the investment firms who analyse the data of risk return in terms of past behavioural pattern reflected in some figures, charts and graphs etc.
Stock brokers are the agents or middlemen who specialise in a variety of financial services such as bond issues, handling institutional accounts, or mutual funds.
Their services are required by investment firms, broker houses, banks, insurance companies, pension funds, mutual funds and other financial institutions involved in investment through secondary market. Stock brokers perform their job for private clients and institutional clients.
Some brokers act only as dealers (client investment managers) while others are principally advisors (equity sales advisors). In large firms stock brokers deal with and advise smaller firms or work for both individual and institutional clients.
Securities Brokers are representatives of brokerage firms. They execute orders to buy and sell securities. They are equipped with knowledge, skills and experience to advice on the sale and purchase of financial assets and decisions taken by management of financial investment firms.
Securities Sales Representatives are supposed to perform the job of understanding and identifying the investment plans of their clients like their risk taking abilities and time horizon for investment and they guide, advice and carry out market transaction on behalf of their clients.
With the advent of technology the market related transactions are carried out online and deals are recorded. Now-a-days, brokers are providing services for portfolio management. They constantly review investments in the light of trends and developments in the market.
Securities Traders are the brokers who work for institutional investments and work as dealers and advisers. They are updated with detailed statistical facts and figures.
Securities Analysts are appointed by merchant banking divisions of banks, financial institutions and investment institutions. They are advisers to their brokerage houses and possess knowledge of current market trends with a capability to predict future trends.
Brokerage Firms are concerned with pre sales, sales and after sales services. These firms have departments to manage the sales and trading for the owners of securities, investment banking for firms and the government for the issue of securities, and capital markets which form an essential arm for trading activities.
Investment Analysts are the professional consultants for their retail and institutional clients equipped to provide accurate information which investors and fund managers use.
They work with firms which provide advice on buying and selling of financial securities and also those firms which have funds to be managed. Fund managers in merchant banks, insurance and pension funds are involved with huge investments made by a large number of investors.
Generally, the task of investment analyst is to comment on economic events affecting business, periodic review of companies’ reports, analyse the statistical information related to business and advise their clients.
Equity Analysts equity market in India has witnessed tremendous growth during the recent past. With the emergence of primary market (i.e. IPO market) and secondary market growth, there is a great demand for experts in equity investment decisions.
Institutional investors, retail investors and Asset Management Companies (AMCs) require equity analysts for their clients. Equity analysts are involved in continuous research of companies’ performance, financial management and risk – return analysis of investment in equity shares of various companies by way of report preparation, field visits, surveys and interview of top management people influencing the decision.
One of the most important instruments of investment through stock market is the mutual funds. The companies or organisations which facilitate this type of investment are known as Asset Management Companies (AMCs).
These AMCs are responsible for the investment made by investors and thereby MF agents are the key channels for apprising the large number of investors of options for investment.
MF’s agents, distributors, bank employees handling Mutual Fund marketing have to be informed fund advisors. The following is the detail of career positions available in MF segment :
Fund Managers are the people or experts who are responsible for managing the Asset Under Management (AUM) of any AMC which is contributed by the heavy amount of investment in equity and debt market.
They not only manage the investment but also provide advice to their clients who may be institutional or individual. They have the responsibility to track the market returns and give good returns to their clients who have shown confidence in their expertise.
Simultaneously they keep on changing their capital structure i.e. debt – equity mix for balanced investment decisions. The criteria for becoming fund manager depends upon the professional degree like MBA in finance and more important the inclination towards Mutual Fund risk – return analysis.
Distributors are appointed by the AMCs who educate the investor sufficiently. Individuals form the largest segment in the distribution category. They perform the role of marketing distribution channels and facilitate individuals to purchase some funds.
Lead Managers are the functionaries who co – ordinate with intermediaries, campaign for the scheme and approach potential investors. Expert professionals having exposure to risk-return conceptual knowledge and practical skills are employed by these organisations.
Dealers execute trades and act as intermediaries between the investors and the equity / debt markets. The dealers have to comply with all the formalities of sale and purchase. A person with a financial background, thorough understanding of stock market operations, communication skills and acumen can be a dealer.
Operations related Career in Stock Market
There are some other positions available in stock market and its operations. These may be categorized into the fund accounting group, the custody group, the financial control group and the MIS & audit group.
The fund accounting group calculates Net Asset Value of funds on a daily basis and maintains books. The custody group make a liaison with custodians appointed by the AMC. MFs buy and sell huge volumes of securities.
The custodians appointed ensure the safe custody of these funds and ready availability. Therefore, the people are required to run these day to day operational activities. The skills, inclination and professional qualifications are desired.
Registrar and transfer agents process the applications and dispatch Unit certificates to unit holders within the Security & Exchange Board of India specified time – frames.
Career with Regulatory Bodies, Rating Agencies and Depositories
To regulate the capital market SEBI (Securities and Exchange Board of India) was constituted in 1992.
As a regulator of stock market, mutual funds and derivative, this body has expanded its business and operation which require professionals from varied backgrounds; finance, accounting, auditing, investment, credit rating, consultancy, mutual funds, law, derivatives products etc.
IRDA as a regulator of insurance business in India requires some investment experts for their valuable advises based on sound analysis of investment of their insurance products.
With the opening up of the insurance sector, private and foreign players have emerged on Indian insurance scene which also provides ample opportunities for professionals associated with investment management profession.
Similarly, to advise the individual investors on their investment related to equity and debt based on respective ratings of the financial instruments, various credit rating agencies have been formed i.e. CRISIL, CARE, ICRA which are always in need of professionals in investment analysis such as; credit analysis, rating analysis, industry analysis, portfolio analysis, economic analysis etc. CRISIL has started courses in financial planning for professionals.
Career in Depositories
Depositories are the organisations responsible for recording, maintaining, authenticating and facilitating paperless trading of financial securities.
These also act as clearing houses and provide services related to DMAT account and transactions clearance. Some of the depositories working in India are; National Securities Depositories Ltd. (NSDL), Central Depositories Services Ltd. (CDSL) and Stock Holding Corporation of India (SHCIL).
For running the business operations of these depositories CA / ICWAI / CS / CFA / MBA with some experience in stock exchanges, custodians, brokerage firms, banks and financial services companies from reputed institutes / universities are required.
Research and Consultancy
Investment firms and institutions differ in the number of professionals they employ in the research and consultancy departments. Equity research can be a one man outfit or a department with a team of professionals drawn from diverse disciplines.
Mutual Funds, FIIs, institutional investors, broking houses hire research specialists. Print and electronic media also offer opportunities for professionals’ expert advice on stock investment and volatility.
The following academic and personal prerequisites are essential to seek a career in investment management :
- Degree / diploma / course in investment management / stock market operations
- Knowledge of finance, business, mathematics, accounting, economics, computers
- Analytical ability and communication skills of expected standard
- Acumen, interest and inclination towards investment market
- Knowledge of financial institutions, tax, financial planning, legal aspects of capital market
- Creative ability to take decisions based on sound analysis
- Zeal to learn latest development with persuasive traits and patience.
Now let’s have a look at some intuitions offering programs / courses in investment management :
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|Indian Navy 10+2 (Tech) Cadet Entry||Men||16 ½ - 19||10+2 or equivalent with Physics, Chemistry & Maths.
(minimum 70% marks in aggregate of PCM, minimum 50% marks in English either in 10th or 12th class).
|Naval Architects Direct Entry||Men||21 - 25||A Degree in Naval Architecture / Mech / Aeronautical / Civil / Metallurgical Engineering|
Now let us understand the terminology used in this article :
It is the amount invested in some financial asset i.e. equity and debt to get some return at a given level of risk.
It is the study of analysing risk and return on investment using analytical techniques.
The relative performance given in terms of grade to the financial asset depending upon the risk. Credit rating agencies determine a set of criteria for rating the instruments on their safety and advise the investors accordingly.
The probability of getting return from investment in financial asset.
Evaluation of the performance of industry based on certain parameters.
Analysing the risk – return profile of a group of securities. It is done to minimize the risk and neutralize its impact on other securities.
It stands for Exchange Traded Funds. A popular financial instrument whose trading is done through stock exchanges. Gold ETFs are instruments whose value depends upon the gold prices and these can be easily traded through exchanges.