What Is a Portfolio Manager?

Portfolio managers are financial professionals who create and implement investment strategies, determining what and when to buy and sell investments to meet their clients’ goals while considering various constraints. In this context, “portfolio” refers to a collection of investments, including bonds, stocks, mutual funds, and exchange-traded funds (ETFs).

Recent trends, such as inflation, challenging macroeconomic conditions, new technologies, and a focus on cross-enterprise perspectives, have created a more volatile investment environment with reduced capital availability. This has renewed emphasis on portfolio management capabilities within businesses, which may add to the need for financial professionals, including portfolio managers.

To illustrate the growing demand for portfolio managers, consider that, through 2033, roles for financial managers will likely increase by 17 percent, much faster than the average for all occupations. With an annual median salary of $161,700, financial managers earn considerably more than other professions [1], making a career in this field particularly attractive. Explore the role of a portfolio manager, as well as potential career paths, job options, and educational opportunities. 

What is a portfolio manager?

Portfolio managers maintain investment strategies for their clients. As a portfolio manager, you may work for individuals, institutions, or both, generating investment ideas, developing and implementing strategies, and managing risks. This role heavily relies on making decisions about what and when to buy and sell your clients’ investments. Many portfolio managers oversee teams of research analysts who provide recommendations for creating and executing effective financial plans and guiding them in making final decisions on buying, selling, and reviewing investments for profitability.

Portfolio manager job description

Whether you are just starting your career or are an experienced investor, your daily responsibilities will involve understanding and communicating with clients, building and evaluating their portfolios, and leading a team that supports your efforts. Explore a sampling of a portfolio manager’s daily responsibilities:

• Develop and implement investment strategies based on client goals, market conditions, and risk tolerance.

• Oversee asset allocation and implement diversification strategies to minimize losses and maximize returns.

• Conduct in-depth research on market trends and economic conditions.

• Collaborate with investment teams to gather insights and refine strategies.

• Monitor, analyze, and adjust portfolios to optimize performance.

• Provide client updates, manage expectations, and assess goals.

• Ensure compliance with regulatory requirements.

What skills do you need as a portfolio manager?

To succeed as a portfolio manager, you should have strong analytical and quantitative skills in investment strategy, portfolio construction and execution, performance measurement, and risk management. This role is typically client-facing, making effective communication and interpersonal skills necessary. Additionally, having sales experience can help balance your clients’ aversion to risk and willingness to explore new opportunities with your goal of increasing their profits. Key skills required for this role include:

• Knowledge of financial markets, investment strategies, and economics

• Understanding of regulatory environments and compliance requirements

• Effective research, data analysis, and data interpretation skills

• Familiarity with risk management principles

• Ability to make decisions and solve problems under pressure

• Proficiency in financial software and modeling tools

Finally, because understanding your clients is vital for success in this role, your ability to listen closely can ensure you develop a strategy that effectively meets their needs.

Types of portfolio manager jobs

Often referred to as investment managers, financial analysts, asset managers, or wealth managers, you can find various jobs within the realm of portfolio management. You may find similar positions in areas including hedge fund management, private wealth, private equity, and trading. 

The types of jobs you may encounter are often defined by factors such as fund size, investment vehicles, and investing style. Additionally, your preference for working with individuals or institutions, as well as your inclination toward passive versus active portfolio management, can influence the type of role you pursue.

• Fund size: Portfolio managers may oversee assets for small independent funds, large asset management institutions, or large businesses. The size of the fund can impact your title; those managing smaller fund assets are sometimes called fund managers, while those handling assets for large organizations may be designated as chief investment officers (CIOs). 

• Investment vehicle: You may manage equity, fixed-income, or a combination of both types of portfolios.

• Investing style: This includes the choice between investing as a passive versus active portfolio manager. Active portfolio managers continuously monitor the market and adjust their strategies in response to fluctuations, while passive portfolio managers design strategies that follow a specific market index, using that index as a benchmark for expected returns.

• Individuals versus institutions: Individual clients often require managers who are knowledgeable about building retirement savings, emergency funds, or college savings plans. In contrast, institutional investors typically invest large sums of money, focusing on capital preservation and long-term growth.

What is the difference between a project manager and a portfolio manager?

A project manager focuses on efficiently and reliably delivering a project with a defined start and end. These projects are typically part of a larger program with a beginning and an end. In the context of project management, a portfolio manager coordinates between various programs, collectively referred to as an organization’s portfolio. This role is distinct from that of a portfolio manager who creates and manages investment accounts.

Portfolio manager career path

A career as a portfolio manager typically requires a combination of education and experience in the finance industry. Portfolio management is not generally considered an entry-level position; however, you can gain experience in junior roles in investment research or as part of a portfolio management team. Once you’ve gained some experience, senior roles such as portfolio analyst or associate portfolio manager may become available. As you progress in the field and demonstrate success, you can qualify for higher-level positions such as lead portfolio manager and chief investment officer. At this stage in your career, you may even decide to start your own firm. Portfolio managers often specialize in a specific asset class as they advance, allowing them to manage specialized portfolios or take on focused leadership roles.

Education and training

Many portfolio managers hold financial analyst certifications in addition to a higher education degree in accounting, business, finance, economics, or another relevant discipline that emphasizes analytical skills. Seventy-one percent of portfolio managers hold a bachelor’s degree, while 19 percent have master’s degrees [2].

Certification is common among portfolio managers, with some employers requiring it before hiring. In addition to the education benefits you will likely gain in preparing for your exam, these certifications can enhance your reputation among your colleagues, increase your salary potential, and help you stand out among your other applicants in your job search. Certification options that may help you prepare for a career as a portfolio manager include:

• Chartered Financial Analyst (CFA) from the CFA Institute

• Certified Financial Planner (CFP) from the Center for Financial Planning

• Certified Portfolio Manager (CPM) from the Academy of Certified Portfolio Managers

Depending on your role, you may also need to obtain a Financial Industry Regulatory Authority (FINRA) license. Although FINRA provides information about various certifications, it does not approve or endorse any specific professional designation.

Where do portfolio managers work?

While portfolio managers can work in almost any industry, including technology, real estate, manufacturing, media, and insurance, the finance industry employs the highest concentration, 32 percent, of portfolio managers, with 20 percent working in other Fortune 500 companies [3]. Preferences for working in public versus private companies are minimal among portfolio managers. However, if you choose this career path, you will likely work for a larger organization; 62 percent of portfolio managers work for companies with over 1,000 employees, and 39 percent work for companies with over 10,000 employees [3]. Specific examples of the types of companies where you may work as a portfolio manager include banks, hedge funds, wealth management firms, pension funds, and insurance companies.

Learn about portfolio management with Coursera

Portfolio management is a lucrative career that requires experience in the financial industry and a complex skill set. Enhance your leadership and decision-making abilities, which are essential for a portfolio management role, with the Investment and Portfolio Management Specialization from Rice University. This five-course series explores how to improve your investment strategies with real-world skills, insights, and analytical tools.

For a more comprehensive option, consider the Master of Business Administration (iMBA) from the University of Illinois Urbana-Champaign, also available on Coursera. This master’s program can help you prepare for various managerial and executive positions across industries.