insight into asset management 2008

8/3/2019 insight into asset management 2008

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Insight into Asset

Management 2008

PAGE 2

A quickoverviewEverything you need toknow about assetmanagement

PAGE 8Working lifeRecent graduates givean inside view

PAGE 21

AZ ofemployers

Featuring:

1st edition

Investment management Fund management

more at targetjobs.co.uk/accounting,targetjobs.co.uk/bankingandinvestmentand targetjobs.co.uk/financialservices

Produced in association with

TARGETjobs City & Finance.


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JPMorgan Asset Management

A s s e t m a n a g e m e n t r e c r u it e r s w a n t i n g t o h e a r f r o m y o u :

Produced in associationwith TARGETCity &Finance.


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Insight into Asset Management 2008 | 1

An overview..............................................2

Buy side vs sell side................................4

Types of work ..........................................6

Graduate profiles ....................................8

Asset categories ....................................11

Asset allocation ....................................14

Charities..................................................16

Consultants ............................................16

Insurance companies ..........................17

Investment trusts..................................18

Pension funds ........................................19

OEICs ......................................................20

Advertisers index ..................................21

Welcome to your careerin asset managementRead on to find out more about asset management,

share recent graduates personal experiences of

starting their careers in the industry and discover

what recruiters are looking for.

Asset management also known as fund management and investment

management is often overlooked by graduates in their career search, andtends to be overshadowed by the more well known and popular area ofinvestment banking.

This is not just another recruitment publication. Instead, we want to giveyou a real insight into the fascinating world that is asset management: whatit is, who the major clients are and what assets are managed, so you can findout more about the industry and consider whether it could be right for you.Profiles of recent graduates explain what its like to be in this fast-movingand exciting industry and the company profiles at the back tell you whatrecruiters want from potential candidates.

We hope that Insight into Asset Managementwill inspire you to considerworking in this industry and give you the necessary background knowledgeto succeed.

Sam PopeEditor

contentsIntroducing asset management

Graduates at work

Assets

Major investors

AZ of employers

6 Graduates at workTypes of workEditor Sam PopeAssistant editor Gabrielle OrcuttDesign Emily RogersProofreader Luke MicallefAdvertising Mark Blythe, Duncan Macintyre,Jonathan NichollMarketing Rachel Cox, Zita BaloghCirculation Rachel Cox, Patty Shufflebotham,Laura GilbertFinance Martin Halliday, Chudar Rameshwaran, LizeHynd, Hayley Harverye, Katrina Brook, Hazel FordIT Phillip Wong, Neil BellSeries editor Steve JamesAssistant series editor Gill WhitemanSeries designer Chris ZammettPublisher Chris PhillipsProduction director Jane AndersonUK chief executive officer Paul Sissons

Published by: GTI Specialist PublishersThe Barns, Preston Crowmarsh,Wallingford, Oxon OX10 6SLTel +44 (0) 1491 826262Fax +44 (0) 1491 826401www.groupgti.com

Printer: Headley Brothers, Ashford

ISBN: 1 84318 483 4AcknowledgementsGTI would like to thank everyone who has taken thetime to write, or find writers, for Insight into AssetManagement. GTI Specialist Publishers, September 2007All rights reserved. No part of this publication maybe reproduced by any means including, but notlimited to, photocopying or stored in a retrievalsystem in any form without prior written consent ofGTI. This is subject to the single exception ofphotocopying by careers advisers or lecturers forcareers counselling. All items so used should befully acknowledged. The views expressed in articlesare those of authors and their publication does notnecessarily imply that such views are shared byGTI. While every care has been taken in the

compilation of this publication, the publisherscannot accept responsibility for any inaccuracies,or for consequential loss arising from suchinaccuracies, or for any other loss, direct orconsequential, arising in connection withinformation in this publication.


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2 | Insight into Asset Management 2008

INTRODUCING ASSET MANAGEMENT

Asset management:an overviewBrush up your knowledge of asset management with our quick overview.

Asset management (also known

as fund or investmentmanagement) is all about managingmoney, including investments,budgeting, banking and taxes, on alonger-term basis than that carriedout in banks or by currency traders.This money is made to work as hardas possible by lending and investing itin many different ways its neverallowed to just sit!

Asset managers are the peopleresponsible for achieving this. Theyremore usually called fund managershere in the UK, while over in the US,theyre better known as eitherportfolio managers or moneymanagers. Their work is trulyinternational, as many manageinvestments on behalf of overseasinvestors and/or invest in overseasassets on behalf of clients based in theUK and abroad. In fact, theInvestment Management Association(IMA) estimates that the assetsmanaged globally by its member

firms totalled an amazing 13.9trillion as of December 2006.Read more about the jobs in assetmanagement on pages 67.

The assets

A huge number of asset classes can beincluded in a portfolio, includingcash, equities, bonds, property, gold,silver, art, etc. Within these broadercategories, the assets can be furthersubdivided; eg equities can be splitinto domestic and foreign; large and

small stocks (including venturecapital); and actual stocks andderivatives (eg futures and options).


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For the purposes of this publication,we have separated them into thefollowing categories: cash equities

bonds property domestic and overseas.Read more about assets on pages1113.

The international element

This industry is highly international,with clients and opportunitiesthroughout the world. Assetsmanaged in the UK on behalf ofoverseas clients represented 27 percent of the 13.9 trillion managed by

member firms of the InvestmentManagement Association (IMA).

The way in which assetmanagement firms manage overseasinvestment varies between companies.Some centralise their management,handling overseas investment fromtheir UK base. Others delegate theirinternational asset management tooverseas offices in the region wherethe asset is based.To find out more about overseasinvestments, turn to page 13.

The portfolio

The main aim in asset management isto construct a portfolio for theinvestor. This process has five mainsteps for the investor and manager.1. Determining how much money the

investor needs and by when.2. Agreeing on the minimum rate of

return on the portfolio to achieveits aims.

3. Specifying an optimum asset

allocation that will hopefully bringin the desired amount of moneywith the least possible risk.

4. Selecting the investments.5. Checking the assets performance

regularly to ensure that theportfolio is on track to reach itsobjectives.

The way in which a portfolio isdesigned depends of various factors.To read more about this, see ourarticle on page 14.

The clientsFund managers represent two typesof investors: retail and institutional.

Retail investors

These are often also referred to asprivate clients or retail investors,most of who either manage their ownmoney or entrust it to managers whospecialise in private client accounts.Some private clients combine the two:managing their own money but alsoinvesting through institutionalinvestors by buying investment trustshares or unit trust units, insuranceinvestment products or adding totheir pension entitlements. Privateinvestors were extremely importantto the investment management field

at the beginning of the last centurybut their significance has slowlydeclined. Retail clients often representthe man in the street, who comes toinvestment managers either directlyor through an independent financialadvisor or their own bank, lookingfor good investment opportunities.

Institutional investors

Nowadays, institutional investorsdominate the investment sector,particularly pension funds and

insurance companies. According tothe IMAs 2006 asset managementsurvey, 77 per cent of assets managedin the UK are invested on behalf of

these institutional investors, with theretail market representing just over20 per cent of total assets.

The growth in importance ofinstitutional investors is due tovarious factors including: changes in society the increase in corporate pension

funds tax policies that favour investment

through insurance companies andpension funds rather than directinvestment

the introduction of unit trusts.

Read in more detail about thedifferent client types on pages1620.

Corporate pension funds 28.1%Insurance 27.1%Retail 21%Other institutional 14.8%Local Authority 5.8%Private client 1.7%Charity 1.4%

Statistics reproduced with kind permission from the IMA.

(Dec 2005 Dec 2006)

Assets managed in theUK by client type


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Buying versus sellingHow asset management fits within the rest of the financial world.

A

sset management is the business

of managing money for clients,who may be high net-worthindividuals, the man in the street,institutional investors or collectiveinvestments such as pension funds.To do this, people working in assetmanagement must interact withother areas of the financial world.

Buy side vs sell side

Asset management is often referredto as the buy side because it buysinvestment products with the aim of

making profit for investors. Sell sideis often used as a catch-all term forother organisations (eg stockbrokers,

often owned by investment banks)

that trade or sell securities orinvestment research the sell sideprofits from the commission it makeson the price of the securities it sells.

The difference between the buyside and the sell side can beconfusing, because investment banksthat carry out sell-side activities mayalso manage money for their clients but these buy-side parts of aninvestment bank must be keptcompletely separate from the sell sidein order to prevent abuse. This

information barrier preventspotential conflicts of interest and isknown as a Chinese wall.

Research and recommendations

On both the buy side and the sellside, analysts work on researchingcompanies in the sector or area inwhich they specialise. Buy-sideanalysts make recommendations toin-house portfolio managers, whothen decide whether to buy or sellstock. This research is only circulatedinternally or to select clients. Sell-sideanalysts do similar research butmake this available to a widerexternal audience, including retailinvestors, buy-side analysts and

portfolio managers, to encouragethem to trade.


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Banking vs asset management

Traditionally, investment bankinghas held a huge appeal to graduates,who perhaps are more familiar withthis area than they are with assetmanagement. However, as you cansee on the previous page, the buyside is closely linked to the sell sideand graduate careers in both areashave much in common, especially interms of career progression, training,

and pay.Graduates embarking on a careerin this area can expect to: Earn anything up to 38,000, with

first-class travel prospects and ahandsome benefits package.

Undergo a company trainingprogramme, lasting on averagefour weeks and often involvingoverseas placements.

Be given challenging andrewarding work that is meaningfuland of real business importance

early responsibility is common. Work in a major city: London isthe main hub in the UK but thereare also fantastic opportunities inEdinburgh.

Asset managementis a very dynamic

and complexindustry, suited toindividuals who arelooking for a careerwith early

responsibility and high visibility.It is an industry that offers anintellectual challenge and excellentcareer prospects, coupled with first-class training and developmentprogrammes. It is a great industryif you are interested in achievingprofessional recognition while

maintaining a good work/lifebalance. We want people who standout strong education, excellentcommunication skills and a genuinepassion for working withininvestment management.Opportunities are not just aimed atinvestment professionals but arealso available within finance, riskand IT.

Claire Adams, graduate programmeco-ordinator, Schroders

A dynamic and complexindustry


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GRADUATES AT WORK

Types of workWhat does a career in asset management involve? We take a look...

There are numerous career pathsin asset management different

people may be suited to differenttypes of work and asset managementcan offer a range of options. As wellas the asset managers (also known asfund managers) who actually manageinvestment portfolios, there areanalysts who research stocks andmake buy/sell recommendations,sales and marketing professionalswho attract potential clients to investmoney with the company, IT andtechnology specialists who developcomplex systems to support thebusiness and offer technical advice,

and operations professionals whoensure the smooth running of thebusiness by administrating processesand systems.

As a recent graduate, youllnormally start your career on agraduate training course to help getyou up to speed with the industryand the skills youll need. As a recentgraduate, much of your learning willtake place on the job and it is alsolikely that you will work towards aprofessional qualification such as the

IMC (Investment ManagementCertificate) or CFA (to become achartered financial analyst). Startingout as an analyst or trainee asset

manager, you could be involved insuch tasks as analysing companiesand putting forward ideas, all thewhile supported by more senior teammembers, who will show you how tolook at companies and come up withideas and recommendations.

In some training programmes,recent graduates will start as analysts

and then manage money once theyfinish their training (normally aftertwo or three years). Asset managersstill do fundamental research oncompanies in the same manner asanalysts, so recruiters look forcandidates with the same qualitiesand skills inquisitive, broad-mindedthinkers who are forward-thinking.

Asset managers

In a nutshell, asset managers pickwhich stocks (eg shares and bonds)should be included in clientsportfolios. Asset managers normallywork on behalf of such clients aspension funds and insurancecompanies to invest often hugeamounts of money. They also manageproducts bought by private clients such as investment trusts or unittrusts which normally involvesmaller sums compared to thoseoffered by institutional investors.

Skills requiredPeople who do well in these jobs arenormally able to think laterally aboutwhat affects stocks or companies, andare open to new ideas and challenges.They also need the following: excellent quantitative and

analytical skills nerves of steel to make (often

split-second) decisions the ability to think outside the box

and challenge or debate ideas good teamworking skills

the ability to think and workindependently, especially underpressure

common sense.

Research analysts

Analysts carry out research toprovide ideas and information toasset managers, who will then makedecisions on the investment portfoliosthat they manage. An analyst mightresearch and develop an in-depthknowledge of a particular group ofcompanies, normally within a specific

industrial or geographical sector. Thisis often a qualitative job, as much asa quantitative one, so it couldcertainly suit someone from a non-finance or non-numerate degreediscipline.

On the buy side (see pages 4 and 5for an explanation) analysts work forinvestment management companiesand provide information to their in-house asset managers. This is acomparable position to researchanalysts on the sell side, who workfor stockbrokers and investmentbanks, where their research is used tohelp the companys clients (normallyasset managers). The advantage ofasset management is that you will seethe results of the assets you manage,and that can be the biggest buzz ofthe job.


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GRADUATES AT WORK

Skills required

Investment analysts cover a widerange of activities and disciplines,depending on their employer.Basically, they must understand suchfinancial information as: company accounts statistics economics political events.They also need to develop expertisein interpreting that information andhow that can impact on investmentdecisions.

Sales and marketing

Sales and marketing professionalsaim to attract new clients to investmoney with the organisation andto retain existing clients. Its possible

to work in sales or marketing in awide range of sectors, but obviouslyprofessionals in this sector have astrong financial focus. Depending onthe employer, sales and marketingprofessionals may deal with potentialand current clients including privateclients or institutional investors seepages 1620 to learn more about theclient types.

Skills required

Successful sales and marketing

professionals tend to be confidentcommunicators who enjoy buildingrelationships but they must also becomfortable with numbers and

familiar with the financial markets.Recent graduates starting their careerin this area will need the followingskills: numeracy

excellent interpersonal skills ability to understand complex

financial products.

IT and technology

IT and technology departmentsprovide all of the technology thathelps to keep the organisationrunning efficiently. IT systems enableinteraction with clients and brokers,facilitate business processes, performcomplex calculations to measure riskor value funds... and many more

critical functions. The main types ofwork in this area are businessanalysis, development, technicalsupport or project management.

Skills required

People who thrive in this area aregenuinely interested not only intechnology but in how it can beapplied to real-life business situations and in particular, the financialmarkets. Life in a technologydepartment can be fast-paced andyou may have several projects on thego at any one time, so the ability tomultitask is helpful. Recruiters oftenlook for: good academic ability technology-related degree and/or

strong interest in technology good communication and

teamworking skills problem-solving abilities.

Operations

Professionals working in operations(sometimes also known asinvestment operations or assetservicing) help to ensure thatbusiness is carried out as efficientlyand punctually as possible.Operations is a crucial function thatsupports all of the activities carriedout by asset managers. As well asdealing with data and ensuring thatbusiness transactions are processedsmoothly, operations teams mayspend time problem-solving or

working on innovations to improveprocesses. Within operations, specifictypes of work could include:

Client services (providing clients withregular information on the value oftheir funds, including statements anddetails of valuations andtransactions)

Compliance (ensuring that all actionsare in compliance with legalregulations and rules)Performance analysis/measurement(analysing the overall value of a fundand/or measuring performanceagainst strict industry standards sothat clients can compareperformance between assetmanagers)Pricing (establishing and agreeing themarket prices of investments theseare the prices that clients will buy

and sell at so accuracy is crucial)Settlements (making sure thataccurate instructions are passed onto the global custodian after an assetmanager and a broker have agreedon a deal)

Skills required

numeracy communication skills attention to detail IT literacy flexibility and adaptability.

Goodcommunicationskills are criticalfor a career inasset management.When you aretalking to a client,

or presenting your ideas in ateam meeting, clear, professional,effective and timelycommunication is extremelyimportant. Recruiters look forapplications that are well writtenand accurate and answers thatmake best use of the word count.At interview, you can demonstrategood communication skills byarticulating your key skills withrelevant examples, and explainingfully why you have chosen the

company, business and industry.Laura Everingham,graduate recruitment manager,Fidelity International

Communication skillsare critical


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GRADUATES AT WORK

Anna Sloan

After an enjoyable summer internship,I was thrilled to be offered a place on mycurrent employers graduate scheme the work is varied and challenging andeven as an intern I felt I wascontributing to the business. I came tothe industry with no specialist financialknowledge but the training schemehelped me overcome that. In-house, Ive

learnt from experienced senior investorsabout the industry and how to analysecompanies. Im also studying for the CFAcharter, a globally-recognisedinvestment qualification.

What I do

Our clients are mostly large companiesand local authorities that employ us tomanage their pension fund money. Wedecide which shares to buy in order tomaximise the value of their pensionfunds, investing money all around theworld from our office in Edinburgh.

I work on our UK mid- and small-capteam and am responsible for companiesin several sectors its essential that Iknow whats happening with them everyday. I regularly meet with companiesand always have a report on the go, inwhich I look at a company in detail andrecommend whether or not we shouldbuy its shares for our clients.

Meeting decision-makers

Meeting management is an importantpart of our investment process and Ifind this very interesting. Ive met some

colourful characters! Its an opportunityto speak to decision-makers aboutfuture plans and historical performance.

JOB Investmentmanager

EMPLOYER BaillieGifford

DEGREENaturalsciences,Cambridge (2002)

Meeting colourful characters

David Parkhill

My degree made me realise that I waskeen to work in industry, rather than inaudit: I knew this was an area in whichI would do well and would have goodcareer progression opportunities. I alsoknew that I wanted to work in the City,with all the excitement and thrills thatthat entails. In my spare time atuniversity I found out as much as

I could, both about the industry as awhole and the employers within it.Before applying for graduate positions, Ispoke to a number of City professionalsabout their jobs and companies andread as many City research reports as Icould lay my hands on!

What I do

As a group finance accountant, my daysare always busy and full. My work isvery seasonal and revolves around year-end and interim reporting. Outsidereporting seasons, I tend to be involved

with more ad hoc projects for seniormanagement. Most of my activitiescarry a great deal of responsibility; forexample, I often prepare presentationslides and quarterly updates that thechief financial officer (CFO) relies upon.

Lots of responsibility

The best aspects of my job are theamount of responsibility I am given andthe opportunities to work with seniormanagement. This inevitably bringsinherent time and accountabilitypressures but I think it will be a strong

springboard in my progression withinthe firm.

JOB Group financeaccountant

EMPLOYER Schroders

DEGREEAccountancy

with finance, Glasgow(2006)

Busy and full days

Lewis Talbot

I knew from my degree that theinvestment industry offered careers thatwere challenging and rewarding bothintellectually and financially. I was alsoattracted to the thrill, the level ofinnovation and the rapid pace of themarkets. The transition from academia tothe workplace was a steep learning curve there was a large amount of information

to absorb and the concept of beingaccountable for large numbers with lots ofzeros on the end was quite daunting!However, the firms support networkhelped me acclimatise far more quicklythan I anticipated.

What I do

Im on a rotational programme,experiencing many elements of the firm.I recently completed a secondment in ourLuxembourg office, where I helped toensure that trades fell into the firms $85billion international fund range efficiently.

This involved analysing and scrutinisingasset reports from custodian banks andour own internal trading platform. I willshortly be returning to the London officeto join the retail desk, where I will help toensure the successful transfer of clientscapital into and (hopefully lessfrequently) out of the firms funds.

Travelling the world

One of the best experiences so far hasbeen the firm-wide analyst induction, heldin New York, where I met many of thefirms leaders and my peers from across

the globe. My time in Luxembourg wasalso fantastic as I learnt a great deal aboutthe trading process and used myweekends to travel continental Europe.

JOB Operationsanalyst

EMPLOYER

BlackRock

DEGREEEconomics,Loughborough

(2006)

Acclimatising quickly

The graduate experience


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GRADUATES AT WORK

Ramsey Craine

I wanted to get into asset managementand knew this area would give me a broadexposure to the various business areas.I was particularly keen to find anorganisation that would encourage andsupport learning and since joiningHenderson I have successfully completedmy CFA level 1, with help from manydifferent people at all levels including

senior management.

What I do

Each morning, I plan my day dependingon my workload. My main responsibility isto prepare documents and presentationsfor client pitches. This involves meetingvarious people throughout the business,following up with them, and agreeingoutputs and pulling the documentationtogether ready to be sent out externally.I work within a team and its a very openand communicative working culture byasking questions and sharing information

we can ensure efficiency andtransparency of information.

Developing relationships

One of the main challenges of my job ismanaging relationships and expectations,and ensuring I incorporate everyonesideas into the document productionwherever possible. Liaising with andobtaining information from senior peopleis something I enjoy but developing theserelationships has been a steep learningcurve. Its great to have exposure to somany different people and learning from

their experience there are no barriers.The career progression opportunities arefantastic, as is the working atmosphere;I never think Oh no, another day of work!

JOB Productspecialist, fixedincome

EMPLOYER

Henderson GlobalInvestors

DEGREEEconomics,Reading (2004);MA accounting andfinance, CassBusiness School(2005)

Working as a team

Leena Nandy

I really loved my finance degree;learning about quantitative approaches,the markets and portfolio optimisation.However, my degree didnt include areassuch as strategy, economics andorganisational behaviour so I decided toundertake an MBA. When I did aninternship with my current employer Ifound a fast-paced, dynamic

environment. I liked the people, thesystematic approach to investmentmanagement and the teamwork. I neverfelt embarrassed about asking questionsand was encouraged to articulate myideas.

What I doMy role has only recently been createdand is very unique. I work on productdevelopment with Barclays Wealth basically working out what clients needand how we can meet this demand.I also provide the training, education andmarketing support their clients will need,

which involves speaking with them inperson or by phone, carrying out trainingsessions and generally being available tohelp with any questions. Im constantlylearning about the people, products andprocesses, and have an incredibleamount of responsibility.

Best of both worldsI love the fact that my job is both verypeople-based and product-based: thebest of both worlds. It is rewarding to seeideas progress to being out there in themarketplace. The work can be verydemanding and challenging but youhave to take it on the chin. At first it canbe daunting, but in a couple of months,you know what youre doing and just geton with it!

JOB Distributionmanager

EMPLOYER BarclaysGlobal Investors

DEGREEFinance,Wayne State

University, Michigan(2001), MBA LondonBusiness School(2005)

People and products

Sergio Ferreira

I joined my current employer as agraduate trainee. I had very limitedfinancial knowledge and wanted toensure that I made the right decision interms of which industry and whichcompany to join. I felt it was a good signthat I found the assessment centrechallenging but not intimidating.

What I do

The graduate programme gave me thechance to rotate between differentdepartments and learn how the variouspieces fit together. It started with a one-week induction, followed by two monthsof training covering various areas offinance and business management.The training also continued throughoutthe one-year programme and beyond.Halfway through the programme I wasoffered a place in one of my preferredareas. Deciding whether to take apermanent role at such an early stage orcontinue in the graduate programme was

a difficult decision I sought advice fromexperienced colleagues, namely mymentor and HR, who were helpful andsupportive.

I have now been a quantitative analystfor nearly six months, working both in theasset allocation and quantitative fundsteams. The strategy team has a top-downapproach and involves analysingeconomic outlook and market valuations so I still get to learn about equities,bonds, currencies, property andcommodities.

A new challengeThe job is especially challenging becauseI dont come from an economicsbackground but its also reallyinteresting and I am enjoying it a lot.

JOB Quantitativeanalyst

EMPLOYERMorleyFund Management

DEGREE

Biochemical

engineering withmanagement, UCL

Analysing market valuations


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GRADUATES AT WORK

Ally Brownsword

People often look at my degree and thenask how and why I ended up in thefinancial industry! The truth is that I havealways appreciated the importance offinance. Before going to university Idiscovered Behavioural Finance byJames Montier, whose articles I readavidly. In light of my interest, I decided toread psychology at university to learn

more about the psychology of humanbehaviour, a critical element of theinvestment universe.

What I doAs a psychology graduate I hadnt hadmuch exposure to finance or economics,so it has been a steep but enjoyablelearning curve. An initial trainingprogramme brought me quickly up tospeed. Im currently on a rotationalprogramme where I will experiencevarious departments across the wholecompany, not just equities. Ive spentfour to six weeks with various teams,

including the M&G global macro hedgefund, the pan-European analyst team,global equities, equity income, fixedincome and dealing. I will soon spendtime with the European equities team,marketing, and small cap.

Fundamental skillsEach day offers new challenges, frompresenting on a particular industry tochairing company meetings andperforming valuations. Two fundamentalskills in my job are the ability toformulate opinions based on very little orlarge amounts of information, and theability to communicate my views to thefund managers. Its important to be ableto argue for or against an investmentcase.

JOB Equitiesanalyst

EMPLOYERM&GInvestments

DEGREE

Psychology, Exeter(2006)

From psychology to finance

Tim Heine

When I found out about the Europeanrotation programme Im on, it caught myeye I could work in three countriesover two years and gain a lot ofexperience. My first rotation was on thesales desk team in Frankfurt, where Isupported the sales managers and gotinvolved in ad hoc projects, research,and client meetings. Working with

senior management helped me makesome great contacts.

What I do

Im now on my second rotation andwork for our fund supermarket platform,which offers over 1,000 funds from 56different asset managementcompanies. Im mainly involved incompetitor analysis for the investmentbond and SIPP (Self Invested PensionPlan) market. I also work closely withour marketing and sales team on otherprojects. For example, we are looking at

revamping the website advisorinterface. I want to continue to developmy knowledge of the UK platformindustry its an exciting area to be inbecause its growing so fast. Until a yearago we didnt offer any life products, butnow were competing against lifecompanies.

Getting involved

One of the highlights so far has been atrip to Marbella. I was asked if I wantedto get involved in a project, which turnedout to involve preparing and translating

a huge presentation for a client event inSpain. Next thing I knew I was asked tocome along! The more you ask, the moreyou get...

JOB Associate, salesand marketing

EMPLOYER FidelityInternational

DEGREE

Businesseconomics, MiamiUniversity of Ohio,MSc finance, York

Doing competitor analysis

Burcu Ugurtas

Asset management offered theopportunity to explore my long-standinginterest in investment in its purest form.My company was a natural choice for meafter I researched its reputation withinthe industry and the level of commitmentthat it could offer to my training andfuture career management. However,ultimately it came down to the people

the opportunity to work with and besurrounded by extremely bright andtalented people was very motivating.

What I do

Im a member of the global portfoliosgroup within the asset and wealthmanagement division. The teammanages global equity portfolios forinstitutional clients such as pensionfunds of large corporations as individualserviced accounts, and for retail clients inthe form of mutual funds. I am a sectoranalyst, covering the global consumer

staples sector. This involves working withlocal investment teams to researchbeverage, food, tobacco, and householdproduct companies such as Colgate,Procter & Gamble, and Heineken, with theobjective of identifying compelling globalinvestment opportunities.

Meeting senior management

The most exciting part of my job is havingthe opportunity to meet with seniorcompany management to discuss theirstrategies and explore their uniquebusiness models. The biggest challenge

for me is managing the wealth ofinformation that we are bombarded withon a daily basis... a good problem tohave!

JOB Vice president,global portfoliosgroup

EMPLOYER

JPMorgan AssetManagement

DEGREEEconomicsand politics, Bristol

Researching consumer staples


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ASSETS

Asset categoriesWe take a look at the five main asset categories in portfolios and consider theirinvestment pros and cons.

When compiling a portfolio,investors will generally invest

in several main areas, includingequities, bonds, cash and property.Currently equities represent the most

popular investment choice butpension funds have recently startedmoving away from them to the saferalternative of bonds. The totalallocation of assets managed in theUK from December 2005 toDecember 2006 can be seen in thetable below.

Cash

Most portfolios contain cashinvestments because they tend to be arelatively safe option; they aredesigned to protect your moneywhile earning a current rate ofreturn.

The following typically comeunder the cash umbrella: cash ie paper money near-cash assets that can be

turned into cash quickly, normallywithin 24 hours

Treasury bills government IOUs

of up to three to six monthsduration that pay no interest andare issued at a discount to parvalue

commercial papers short-termbonds issued by companies tofinance their short-term creditneeds.

Investment pros and consGranted, it might not be asglamorous as other forms, but cashcan help build a respectable amountof wealth without the less attractiverisk of losing it. It pays interest, has adefined value and is one of the bestinvestment assets when the financialmarkets are crashing. It is also themost liquid form of investment ifquick access to money is needed.

However, because of its lowerrisks, it also commands a lower rateof return when compared to mostother investments. Therefore,investors would usually not want tohave most of their portfolio investedin cash.

Equities

Equities are currently the mostpopular form of asset managed,although there seems to be anupward trend for bonds. The termequities is often used

interchangeably with stocks.Equities provide investors withownership and participation rights ina company. For example, if a soletrader put 100,000 of their ownsavings into their business this wouldbe called their equity stake. If theythen decided they needed moremoney, they would go to the bankand ask for a matching loan of, say,100,000. This financialarrangement would mean that thesole trader still has 100% of

ownership rights to their companybut that it is financed 50% throughtheir equity and 50% though debt,or loan.

If his business does well, he mightneed to expand it somehow. Hecould either go to the bank and takeout more debt or he could getsomeone else on board to put more

equity into the business.Large companies will often float

on the stock exchange to enable boththe general public and institutionalinvestors to buy shares in them,thereby attracting much-neededequity into the business. Theseshareholders will normally have asay in the way in which the businessis managed, although not on a dailybasis. Managers will have thisresponsibility, and they will report toa board of directors who, in turn,will be answerable to theshareholders.

Shares in large companies arenormally traded on stock exchanges.Most will be quoted on only onestock exchange but some very largecompanies with an internationalpresence can be quoted, or listed,on several. In order to be quoted,companies need to meet certainrequirements, including financialreporting standards and a certain

amount of stock that must be freelytradable.

Equities 52.4%Bonds 31.7%Cash/Money market funds 8.7%Property 4.8%Other 2.4%

Statistics reproduced with kind permission of the IMA,

www.investmentuk.org

Assets managed in theUK asset allocation


14/26


ASSETS

Some countries operate secondaryexchanges with less stringentrequirements; these are aimed atsmaller or younger companies who,as yet, cannot meet the criteria for

the main exchanges. The AlternativeInvestment Market (AIM) is the UKssecondary exchange. Institutionalinvestors can still buy into thesesmaller companies, and many dobecause it gives them the opportunityto either: sell all or part of the holding to

another institutional investor ortrade buyer (ie another company)

sell shares in the stock market ifand when the company can bequoted.

This kind of investment is calledeither venture capital or privateequity.

Investment pros and cons

Ordinary shares are inherently risky,as financial situations often changefrom excellent to poor from year toyear.

Shareholders are at the back ofthe queue when it comes to beingpaid; creditors (ie banks and othermoney lenders) must always be paidfirst. If times are tough, there may benothing left for the shareholders bythe time the creditors are satisfied. Ifa company has such a bad time thatit goes into bankruptcy, the creditorsautomatically have priority over anyremaining assets.

However, on the flip side, sharescan also be extremely profitable,otherwise they wouldnt be the mostpopular form of investment! When acompany is doing well, creditors will

still receive their fixed amount butwill not benefit from any increase inprofits or asset value growth.Shareholders, on the other hand, willreceive a percentage of the profitmade in the shape of dividends. If itsbeen a great year, the shareholdersshould be very happy indeed.

Bonds

Simply put, bonds are IOUs;agreements under which sums arerepaid to investors within an agreed

period of time. If you purchase abond, you are in effect lendingmoney to whatever institution isissuing the bond.

Normally, bonds are issued eitherby one of two sources: thegovernment (gilt-edged bonds) or bya public company (ie corporatebonds), and last for a fixed periodcalled a maturity. During this time,the bondholder will receive interest

payments at a fixed rate, called acoupon. At the end of this time theredemption date the amountborrowed (the principal) is repaid orredeemed. However, there arevariations on this.

When the government wants toborrow money, it will issue loanstock, or gilts. Until 1981, thecoupon and principal were fixed inmoney terms, so if you bought a2,000 bond, and the coupon was10%, you would receive 200 a year

for the life of the bond and then get2,000 on redemption. However, in1981, the UK government startedissuing bonds whose coupons and

principals were indexed to the retailprice index (RPI). The bonds issuedpre-1981 are referred to asconventional while those issuesthereafter are index-linked or linkers.

Outside of the traditional fixedincome classes of government and

corporate bonds, clients and assetmanagers may also seek furtherdiversification of their portfoliosthrough the use of more esotericfixed income assets such asinfrastructure, structured products(including collateralised debtobligations CDOs) and leveragedfinance, each of which has its ownunique risk/return profile.


Bonds are normally rated in order of

safety, with (AAA) being the best and(D) being the riskiest also knownas junk bonds.


15/26


ASSETS

It is thought that investment-grade bonds are generally less riskybecause large well-known companiesare less likely to go bankrupt anddefault on their IOU; their safety

rating would normally be BBB orhigher. Gilts are also considered to bevery safe forms of investmentbecause the government willguarantee the loan.

Provided a bond does not default,its income stream and repaymentvalue are certain.

Property

Most investors who hold directproperty investment will ownbuildings. While homes are obviously

buildings, they are not normallyincluded in UK institutionalportfolios. Instead, propertyinvestment comprises of shops,offices and industrial buildings.

A buildings worth is determinedby its prospective rental worth. Thiswill be high if there is strongeconomic growth and inflation, butwill decrease during times ofrecession and if the buildings aresitting idle, are outdated or havedepreciated in value. Additionally,the tenant needs to be considered.Are they reliable? Or is there a riskthat they will default on their rentpayments?

Institutional investors areinterested both in existing propertiesand in future developments, eghousing estates, office buildings andshopping centres.


Because of the inherent uncertainty

in this area, property is more likeequities than bonds in terms of risk.On the one hand, there are greatprospects for an increase in capitalvalue and rental income but on theother there are uncertainties tocontend with too. Moreover,property cannot be easily convertedinto cash as it takes time to arrangeproperty deals. The value of propertycan also be badly affected by otherinfluences, such as economicdownturn in an area.

Domestic vs foreign assets

Most investments made on behalf ofpension funds, insurance companies

and charities are done so in UKassets and this trend tends to bereflected in most countries. However,investors in the UK arent limited toUK assets; they can and do invest

overseas too, in a wide range of areasincluding hedge funds and retailfunds.

Asset management is becomingincreasingly international. InOctober 2006, the BBC reported thatinvestment into developing countriesis growing. Last year, UNCTAD the United Nations Conference onTrade and Development estimatedthat investment in developingcountries had almost doubled in twoyears from $175 billion in 2003 to

nearly $335 billion in 2005/06.This international investment

boom is being attributed to: rapid economic growth,

particularly in such countries asChina and India

high prices for raw materials the growing liberalisation of many

developing countries economies,which makes investing in themeasier.


Investing overseas can be a fairlysecure option in countries with along-standing reputation in this area,such as the Isle of Man, the CaymanIslands and Bermuda. There aremany other advantages to offshoreinvestments, too.

For a start, many investors canbenefit from an attractive reductionin tax. Small countries (or tax

havens) with tiny populations andfew resources may offer taxincentives to foreign investors toattract outside wealth in order todramatically increase their economic

activity. Overseas or offshoreinvestors form a corporation in thatcountry, and this protects theiraccounts from the higher taxdemands that they would be subjectto in their own country.

Secondly, there can be greaterdiversity in investment opportunities.Offshore accounts and investmentsgive investors access to internationalmarkets and exchanges, which theymight not have enjoyed otherwisedue to their own countrys financial

regulations. Some of theseopportunities exist in developingcountries, where privatisation isbecoming commonplace.

However, there are disadvantagestoo. Ever wise to the potentialrevenue lost through offshoreinvestment, the tax man is lookingfor ways to restrict access to overseasopportunities or at least the taxbreaks they offer. Additionally,offshore accounts arent cheap to setup. In some cases, an offshorecorporation may need to be set up,potentially leading to expensive legaland registration fees and therequirement that the investor own aproperty in the country where theiroffshore account is located.Moreover, many offshore accountsstipulate a minimum investmentamount of anything from $100,000to $1 million.


16/26


ASSETS

Asset allocationOnce a decision has been made on which asset categories to include in a portfolio,

the next step is to decide how much to invest in each and what kind of investmentapproach the client is willing to take.

Asset allocation is one of themost important aspects of asset

management, as it determineswhether or not an investor will meetthe minimum rate of return on theirinvestments and thereby achieve their

financial objectives. The skill in thisarea lies in the ability to balance riskand reward throughout the differentasset categories in the portfolio. Aspreviously discussed, the differentasset classes have varying levels ofrisk and return, and each will behavedifferently over an investmentperiod.

Active or passive?

Asset allocation can be either activeor passive, depending on the clients

investment preferences.

Active management

This means that the investor is usingsomeone else such as a fundmanager or a team of managers torun their investment portfolio. Themanagers will base their

management decisions on what tobuy, sell and hold on analyticalresearch, financial forecasts and theirown judgement and experience.

Passive management

The opposite to active management,passive management (or indexing)tends to reflect a market index ratherthan trying to beat it. Investors whoprefer to opt for this strategy believein the Efficient Market Hypothesis(EMH), which states that since the

markets tend to provide all therelevant information, stock picking ispretty useless. Passive management,instead, favours investing in an index

fund a type of mutual fund whoseportfolio matches or tracks thecomponents of a market index, suchas the FTSE 100. The advantages ofan index mutual fund are that itsupposedly gives a broader market

exposure, lower operating costs anda lower portfolio turnover.

Asset allocation types

There is no magic formula tocalculate the correct asset allocationfor every investor.However, a fund manager will takegreat care in considering theinvestors aims, their marketexpectations and their views on riskwhen determining the assetallocation in their portfolio. As there

are different types of asset classes,there are also different types of assetallocation, including the following:


17/26


ASSETS

Strategic asset allocation

This method involves reviewing andrebalancing the mix of assets in aportfolio to maintain the long-termgoals. When first compiling the

portfolio, a base policy mix will beestablished, based on expectedreturns. At various intervals duringthe portfolios lifespan, this mix willbe reviewed and readjusted in orderto take into account fluctuatingmarket conditions.

Constant-weighting asset allocation

With this, the assets within aportfolio are regularly rebalanced.So, if one asset declines in value, thenyou should purchase more of it. On

the other hand, if an asset increasesin value, its time to sell. In terms oftiming for a rebalancing, it isgenerally agreed that the portfolioshould return to its original mixwhen an asset category moves morethan five per cent in either way fromits original value. The potentialdownside is that rebalancing mighthappen too frequently.

Tactical asset allocation

This is quite a flexible andmoderately active approach toallocation. It allows for short-termdeviations from a portfolios originalasset mix to take advantage of anyunusual or exceptional investmentopportunities. However, it doesrequire some attention and disciplineas managers must know when toreturn to the original asset mix onceany short-term profits are gained.

Dynamic asset allocation

The key to this type ofallocation is a regularadjustment of the assetmix, depending on therises and falls in themarkets and economicgrowth and recession.As opposed to constant-weighting, dynamic assetallocation demands that you selldeclining assets and buy those on theincrease. Therefore, stocks would besold in abear market (in anticipation

of further decreases) and bought in abull market (in anticipation offurther gains).

Insured asset allocation

This is the best option for an investorwho only likes a low level of risk,but who still wants to attempt activeportfolio management. A base

portfolio value is established at thestart, below which the portfolioshould not be permitted to drop.The trustees will exercise activemanagement while the portfoliosvalue stays above base level.However, if it drops back to the basevalue, the strategy will change to oneof investing in risk-free assets to fixthe base value and give somebreathing space to eitherreallocate assets orcompletely change the

investment strategy.

Integrated asset allocation

This strategy considersboth the investorseconomic expectationsand the risk in establishingan asset mix.

While all of the other types ofallocations take into considerationexpectations for future marketreturns, not all account for howwilling an investor is to take risks.

This approach does both. However,investors will have to choosebetween either a dynamic or aconstant-weightingapproach, otherwisethe two willcompete withone another.


18/26


MAJOR INVESTORS

Major investorsFund managers work on behalf of investors. But who are these clients and whatmakes them special?

Various clients invest in the long-term asset market. The followingare the major players: charities consultants

insurance companies investment trusts pension funds units trusts and open-ended

investment companies (OEICs).Over the next five pages, well takea look at what each client is, whatthey do and the investment optionsopen to them.

The majority of charity funds arevery small and may only be made upof a bank account or a small holdingin one of the charity-specific unittrusts. However, there are some verylarge charities, such as thoseassociated with Oxford or

Cambridge colleges or the WellcomeTrust, with portfolios to rival anypension fund.

The kind of assets that a charitycan hold will be determined by: whether it is governed by the

Trustee Investments Act 1962 any constraints that the trustees

may set (for example, a health-related charity might object tohaving shares in tobaccocompanies)

what their resources are in relation

to their objectives.Charity funds are usually exemptfrom tax and are managed byexternal managers.

Charities

If a client whether retail orinstitutional is looking to startup a new, or restructure an existingpension scheme, or is dissatisfiedwith the way their assets aremanaged, they will turn to aconsultant to provide informationand opinions on potential assetmanagers.

Consultants will gain thisinformation by using questionnairesand interviews, by conducting theirown research on the potentialcandidates and by arranging a

beauty parade for the managersshortlisted by their client. Duringthis beauty parade process, the clientwill have an opportunity to ask themanagers questions on how theyrun their investments.

While this may seem a sensibleoption, some people question thevalue of this type of activity, claimingthat it puts managers under suchintense pressure that they focus moreon what the competition is doingrather than concentrating on theliability structure of funds.

Consultants


19/26


MAJOR INVESTORS

The insurer offers clients financialprotection for a certain amount ofmoney, or a premium, for an agreedperiod of time. The underwriterdecides what price to put against arisk to work out how muchinsurance or reinsurance should beallocated to mitigate it. If the clientclaims on their insurance, the insureris liable to pay out compensation.

But how do they make theirmoney? Insurance companies collectpremiums from thousands ofcustomers and then pay out to thosewho make claims. If they collectmore premiums than they make

payments, they will make anunderwriting profit. Manycompanies make a profit on thefloat, or the money they make on thepremiums that they invest.

Insurance can be divided into twocategories: general and long-term,with most large companies acting inboth arenas.General insurance: This providesprotection in such areas as fire andaccident; motor; and marine,aviation and transport.

Long-term insurance: This applies tolife insurance and group pensionsbusiness.

Life insurance (or assurance)

With life insurance, an individualpays out either a monthly or yearlypremium to their insurance company.In the event of their death, a lump

sum will be paid out to their namedbeneficiary, giving them a form offinancial security. Life insurancenormally comes in three differentforms: Term insurance: A temporary

insurance policy, in which benefitsare only paid if the client diesduring a specified time. This ispure protection and doesntguarantee a pay-out.

Whole-life (aka whole-of-life):This lasts throughout a clients lifeand is both protection andinvestment: their dependents willcertainly receive a pay-out but theclient wont as theyll be dead!

Endowment: Premiums are paidfor a certain term and the sumassured is paid at the end of theterm or on earlier death. This ismainly investment and payswhether the client dies or not.

Whole-life and endowment policiescan be either with profits or unit-

linked.

With-profits

These offer both a guaranteed sumand a share of the investment returnof the insurance companys life fund.The fund will normally be invested invarious different asset types but theremay be a bigger weighting in bondsbecause they promise returns onspecific dates.

Unit-linked

With these, the insurance companymaintains a fund that is split, foraccounting purposes, into units. Aguaranteed sum is assured, but the

death benefit may be higherdepending on the value of the unitsat the time of death. The returnsreceived will depend on which fundswere selected and how well they have

performed. Since this relies heavilyon market and asset managerperformance, these are riskier thanwith-profits policies.

Pension business

Insurance companies also oftenmanage: an organisations entire pension

scheme, investing it either in itswith-profits or unit-linked funds

personal pension plans self-administered company pension

funds (in this event, the fundsassets will probably be managedas a distinct portfolio rather thanbeing pooled with other clientscontributions).

Investment options

Generally, any insurance companysmain business is unlikely to fallconsiderably from one year to thenext, due to new businessopportunities and clients providing

liquidity. The continued use of short-term investments can be expensive solonger-term options may provide thebest solution. While some investmentin equities is almost certain, mostinsurance funds will invest more incash and bonds.

www.abi.org.ukThe Association of BritishInsurers

Find out more

Insurance companiesThese companies offer financial protection against risk in exchange for a premium,then pay out if a customer makes a valid claim.


20/26

www.theaic.co.ukThe Association of InvestmentCompanies


MAJOR INVESTORS

Investment trusts are a popular wayof investing. They are similar toother companies in their structure they have shareholders and are runby a board of directors and theirshares can be bought and sold in the

same way as other companies.However, they differ in theirobjectives: they dont actually makeanything or provide any kind ofservice. Their sole reason for existingis to invest in other companiesshares or in other types of assets.

What they do

The money invested in an investmenttrust is pooled with that of otherinvestors. Then, a professional fundmanager buys shares in a widerrange of companies than mostindividual shareholders would haveaccess to. Those with only smallamounts of money to invest canbenefit from being exposed to adiverse portfolio of shares, therebyspreading the risk of investing on thestock market.

Trusts often specialise in certainsectors and types of company, or incompanies from different countries.According to the London Stock

Exchange, over 300 investmenttrusts are responsible for managingof billions of pounds worth of assetson behalf of investors. TheAssociation of InvestmentCompanies (the trade association forthe industry) classifies trusts into thefollowing categories: international (general) international (capital growth) UK (income growth) North America Far East (exc Japan)

property continental Europe

commodity and energy emerging markets smaller companies venture and development capital.Investment trusts are called closed-end investment funds because theyhave the same capital structure ofUK companies: fixed rather thanvariable. The companies issue a fixednumber of shares and if they want tochange this at any time they must gettheir shareholders approval. Whilethis is possible, its also rare.

Shareholders cannot get their moneyback but they can sell their shares toother investors. What this means isthat the money invested is notchanged for long periods of time: ieit is closed.

Investment trusts can be eitherself-managed or the investmentmanagement can be given to externalmanagers. Self-management is fairlyuncommon and involves having anin-house team of investmentmanagers who are employees of the

trust. The majority of investmenttrusts are managed externally.

The benefits

The benefits for investors are that: You can pool your money: This

helps cut down on dealing andadministration costs.

You can spread your risk: Eachinvestment company owns sharesin a range of investments, so thiswill help you achieve a diversifiedportfolio. Investors are not solelydependent on the success of one ortwo investments.

You benefit from someones

expertise: Investment companiesuse experienced professionalmanagers to handle theirinvestments.

You can invest small amounts: 30a month is enough to get youstarted or you can contribute smalllump-sum payments.

Find out more

Investment trustsThese companies, quoted on the London Stock Exchange, invest their shareholdersfunds in the shares of other companies or in other types of assets.


21/26


MAJOR INVESTORS

P ension funds are a form of savingsthat employers and theiremployees pay into to provide asource of income on retirement.Private-sector pensions are normallyorganised within companies or

organisations themselves, and arefully funded, meaning that themoney comes from payments madeby both the employer and itsemployees well in advance of whenthe pensions will be drawn. Thisprotects employees in the event thattheir company goes bankrupt.Pension scheme funds are keptseparate from employers, placed inspecial legal relationships calledtrusts. Thebeneficiaries are thepension holders or their immediatenext of kin.

Types of funds

As well as the state pension, pensionschemes fall into one of two maincategories: final-salary schemes andpersonal pension.

Final-salary schemes (aka defined benefit

schemes)

These are more commonly offered bypublic-sector organisations. A final-

salary scheme is run by anorganisation itself, with contributionsmade by its employees. Theorganisation invests thesecontributions and then when anemployee retires, it will pay out aproportion of their final salary forevery year of service normally1/60th.

Employees like final-salaryschemes for the peace of mind theybring: benefits are normallyguaranteed. However, they can be a

cause for concern for employersbecause the organisation must

guarantee that there will be sufficientmoney in the scheme to cover itsliabilities. Poor investment returns inrecent years have forced somecompanies to pay out tens orhundreds of thousands of pounds in

order to keep the schemes healthy.Therefore, many companies haveabandoned this type of pension.

Personal pension schemes (aka defined

contribution schemes)

In these, individuals still pay into afund as do their employers in thesame way as in a final-salary scheme.However, the fund itself is not theasset of the company but of a pensionprovider. The factors that influencehow much a person will receive whenthey draw their pension are: how much they contribute to the

fund how long they pay in how well the fund grows through

investment returns.

The benefits

Pension funds can be invested in awide variety of ways, with differentpros and cons.

With-profitsA medium-risk option, these fundsinvest in a mixture of UK andoverseas shares, property, fixedinterest and cash deposits. Since theaim is to balance the highs and lowsin the stock market, pensionproviders can be quite cautious.The upside is that once a bonus hasbeen given, it cannot be taken away,so the value of funds cannot fall.Additionally, in retirement, anotherfinal bonus may be given if

investment conditions have beengood.

Unit-linked

This is generally considered riskier asthe value may change alongside theunderlying investments. On the otherhand, the long-term returns can bebetter. The main types of funds in this

area are: Managed funds: Popular, as they

invest in a mixture of both UK andoverseas shares, property, fixedinterest securities and cash deposits.

Specialist funds: Investing in onlyone type of asset; ideal for saverswho prefer to make their owninvestment decisions.

Tracker funds: Follow theperformance of a certain stockmarket index such as the FTSE100, and are therefore passive.They cost less than managed funds.

Lifestyle funds: Savings arenormally placed in a tracker fundbut as retirement approaches, themoney is gradually switched (overfive to ten years) into a safer, fixed-interest fund.

Since many people receive pay risesat two per cent (or higher) above theinflation rate, final-salary schemesmust invest in assets in order tomatch the growth and meet their

liabilities. Personal pensions are notunder such pressure but they do haveto achieve good levels of growth toattract investors. Therefore, firmsthat sell these products must becompetitive to both secure businessand achieve growth.

Pension fundsThe UK asset management industrys biggest clients, providing retirement income.

Find out more

www.thepensionservice.gov.ukThe Pension Services website,

with information for individuals,employers and providers.


22/26


MAJOR INVESTORS

Unit trusts and open-ended

investment companies (OEICs)Collective investments where investors pool their money to minimise risk and share gains.

Unit trusts and OEICs are bothtypes of collective investment,which means that a clients money ispooled with lots of other investors

in one big fund. This in turn isinvested a wide variety of assets.However, there are differencesbetween unit trusts and OEICsalthough they offer the samebenefits. Unit trusts issue units, while

OEICs issue shares. Unit trusts have two prices: a bid

price (at which you sell) and anoffer price (at which you buy).OEICs have one single price, atwhich you both buy and sell.

Unit trusts and OEICs areoverseen by different independentbodies: the Trustee for unit trustsand the Depositary for OEICs.

Unit trusts

Unlike investment trusts, unit trustsare legal trusts. Assets are controlledby the trustees (usually large banks)on behalf of the beneficiaries(individual and institutionalinvestors). The trustees are

responsible for ensuring that theassets are managed according to theterms of the trust deed. Many wellknown unit trust managers alsomanage investment trusts andpensions funds, and some areinsurance companies. The managersare responsible for the dailyinvestment management and alsopromote the trust.

The pool of investments thatcomprise the unit trust is divided intoequal amounts, or units. Unit trusts

are open in that anyone can buyunits from the manager, who willcreate new units for them or sellback their units for cancellation or

liquidation by the managers. Themanagers then make correspondingpurchases or sales of investments.Purchases or sellers of units dont

have to deal directly with themanager: they can get an agent suchas a stockbroker or an independentfinancial adviser to act on theirbehalf.

Like investment trusts, unit trustshave wide aims and portfolios willvary according to the objectives.Generally, unit trusts have the samerange of objectives as investmenttrusts but, because of slightdifferences in taxation treatment,some unit trusts only invest in cashor bonds.

OEICs

OEICs have been around for a whilein Europe but only came intoexistence in the UK in 1997 to caterfor the preferences of continentalEuropean investors, who preferred acompany structure over the legalstatus of the unit trust. OEICs arecompanies with variable sharecapital ie they are open-ended

and are governed by a special free-standing code, outside of theCompanies Acts. An OEIC can beconsidered as similar to aninvestment trust (in that it is acompany) and similar to a unit trust(in that it is open-ended). As far asmost investors are concerned, OEICsare merely revamped unit trusts.

The benefits

Unit trusts and OEICs are medium-to long-term investments. Investors

can access their money at any timebut it is best to wait for at least threeto five years. As is the case withinvestment trusts, unit trusts and

OEICs require a fairly low level ofinvestment, typically 500 as a lumpsum or 50 per month, for example.Other benefits for investors include: Theyre a great way for small

investors to benefit from thepower of large institutionalinvestors in the stock market,offsetting some of the risk.

The money is pooled with otherinvestors to make up one largefund. This is then invested acrossmany different assets, therebyspreading the cost and risk.

The expertise of an expert fund

manager looking after the moneyand making any necessaryadjustments according to theperformance of individualholdings, the market conditionsand the funds aims.

www.trustnet.com

A research website with newsand information on a wide rangeof investment possibilities.

Find out more


23/26

EMPLOYERS


Salary: 35,000 (29,000 Finance,33,000 Operations)

Benefits: bonus (discretionary) life assurance pension scheme (with companycontribution) private healthcare season ticket loan days holiday25

Number of vacancies: 20Lines of business that recruit

European Equities Multi AssetPortfolios Global Portfolios EmergingMarkets Fixed Income Real Estate Currency Finance InvestmentOperations and Client Services ClientInfrastructure (Sales, Marketing,Strategy & Planning)

Internships: Yes

When: Year-round - see the'Opportunities Now' section of thewebsite as this is where we advertise allintern vacancies.

Degrees sought: all degree disciplines

Locations: London & Frankfurt

Apply to:jpmorgan.com/careers

Closing date: Full time 18/11/07

Summer internships: See individualopportunities for details.

Who, what and why?

We manage assets for a broad spectrum ofinstitutional and retail investors, includingpension funds, governments, insurancecompanies and private individuals. With anoverall AUM (assets under management)

of US$1.1 trillion to invest on behalf of adiversified group of global clients, ourbusiness isn't governed by short-termshifts in the markets; we have to deliverthe best possible returns through theintelligent use of investment vehiclesranging from currency and equities tofixed income and real estate.

The wow factor

Asset Management is a fast-moving worldwhere talented people can achieve greatthings. If you want responsibility and thechance to make an impact at an early

stage in your career, youll find it atJPMorgan. New technologies, innovativeideas, changing markets and a pipeline ofhigh-quality work all combine to makeJPMorgan an exhilarating place to work.You will advance, develop and evolve andas your career expands so will we.

Why JPMorgan Asset Management?

From junior analysts to senior managers,they agreed there were six major reasonsto join JPMorgan: the scale, scope andprestige of the group; our reputation as a

business innovator; the chance to make apersonal impact at an early stage; high-quality training and development;exceptional quality of work; and a spirit ofco-operation and teamwork. There aremany dynamic reasons as to why therehas never been a better time to launch acareer with us.

Preparing leaders

Our training programmes combine on-the-job learning with classroom instructionthat is on a par with the worlds finestbusiness schools. As a result, youllemerge with a thorough grounding in yourchosen business area as well as a broadunderstanding of the wider commercialpicture.

Can you do this?

We are looking for team players and futureleaders with exceptional drive, creativityand interpersonal skills. Impeccableacademic credentials are important, but soare your achievements outside theclassroom. Youll need to express apreference for one business area whenyou apply, so its important youunderstand the difference between them.Youll find this information and morehelpful advice about graduate careers andinternship opportunities at

jpmorgan.com/careers

Applications acceptedCV&le

tter

EAF

Onli

ne

E-mail

Business facts

JPMORGANASSET MANAGEMENT


24/26


Why this career is

second to none...

Asset management is typicallyseen as a male occupation butthere are plenty of women whoare enthusiastic and passionate

about the job. Being femalecertainly isnt a hindrance tobeing a successful investmentmanager.

Anna Sloan,investmentmanager,

Baillie Gifford,page 8.

...women do well in theinvestment industry

Its great to learn from so manydifferent peoples experiences there are no barriers. The careerprogression opportunities are

fantastic, as is the workingatmosphere; I never thinkOh no, another day of work!.

Ramsey Craine,product specialist,fixed income,

HendersonGlobal Investors,

page 9.

...each day brings adifferent challenge

The graduate programme gave methe ability to rotate between thecompanys different departmentsand understand how the various

pieces fit together. Trainingcontinues throughout the one-yearinduction programme andbeyond.Sergio Ferreira,quantitativeanalyst, Morley

Fund Management,page 9.

...you can be sure of goodtraining

Each day offers new and excitingchallenges, from presenting on aparticular industry screen tochairing a company meeting andperformingvaluations.

Ally Brownsword,equities analyst,

M&G Investments,page 10.

...they love their work

I worked in three countries overroughly two years and got a greatgrounding in sales and marketingwithin finance.Tim Heine,associate, salesand marketing,

FidelityInternational,page 10.

...their inductionprogrammes are excellent

The most exciting part of my jobis having the opportunity to meetwith senior company managementto discuss their strategies andexplore their uniquebusiness models.

Burcu Ugurtas,vice president,

JPMorgan AssetManagement,

page 10.

...the chance to meet

senior management

You need to be proactive. Peopleare there to help, but the resultsyou achieve depend on you.

Leena Nandy,distributionmanager,

Barclays Global

Investors, page 9.

...you need to be the best

Most of my activities carry a greatdeal of responsibility; for example,I often prepare presentation slidesand quarterly updates, upon whichthe CFO relies.

David Parkhill,group financeaccountant,Schroders,

page 8.

...early responsibility is

likely

I knew that the investment industryoffered challenging and rewardingcareers, both intellectually andfinancially, and I was also attractedto the rapid pace ofthe markets.

Lewis Talbot,

operations analyst,BlackRock, page 8.

...they were attracted tothe industry


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ETjobs Engineering G e-skills chances G TARGETjobs City & Finance Channel Islands G TARGETchances inve

banking for ethnic minorities G TARGETchances IT & consulting G TARGETjobs Web Directory G npower Ene

hallenge G TARGETjobs Civil & Structural Engineering G TARGETcourses Postgraduate Fair Midlands G TARGET

es real estate G TARGETjobs Law Scotland G TARGETjobs Work Experience G TARGETchances investment banki

women G invest in your future G TARGETcourses Postgraduate Fair Scotland G TARGETjobs Construction (School

r edition) G TARGETchances engineering G TARGETjobs ITG TARGETjobs LawG TARGET National Pupillage Fai

RGETchancesprofessional services G TARGETjobs Management Consulting G TARGETjobs Work Experience Law

ETchances technologyG TARGETjobs Property G OUT in the City G TARGETjobs Construction & Building ServiceRGETjobs National Graduate Recruitment Awards G TARGETjobs Public Service G TARGETjobs Quantity Surveyin

lding Surveying including Commercial Management G TARGETjobs magazine G TARGETchances alumni G TARG

s Retail G TARGETchancespublic sector G TARGETjobs City & Finance G TARGETchances regional law G TARGE

Teaching G TARGETjobs Europe G TARGETchances fund management G TARGETjobs Equal Opportunities G TA

obs Freshers Guide G TARGETcourses Conversion & Vocational Law G TARGETchances law


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