Portfolio managers are among the top earners in financial services. A portfolio manager invests the capital of private individuals as well as institutions, like pension funds, endowment and foundations, through a fund structure. Although not as well paid as experienced investment bankers and hedge fund managers, a portfolio manager at an asset management firm will still command a six-figure salary. The best performing portfolio managers will earn seven figures in salary and bonuses in any given year.
Funds generate income through a fee structure, which can be up to 1 percent of any assets under management and is often less. This means a firm can remunerate its employees very well, if its funds are performing strongly. The larger a fund and the better it performs, the more a portfolio manager will earn. Pimco, the largest bond manager in the world in assets under management, manages a number of funds, its largest is the Pimco Total Return Fund, which manages $240 billion and charges 0.46 percent management fee.
There are few positions open to graduates without experience and most start as a junior analyst. Many who work as a fund manager will have gained experience, for instance, as an accountant or in an investment bank. Most will have an economics, finance or accounting degree and will have around four years post education experience and have achieved their Chartered Financial Analyst designation. A junior portfolio manager will assist the portfolio manager, researching investment targets and may manage the fund in the portfolio manager’s absence.
The majority of an asset management company’s earnings go to the owners and head portfolio managers, and larger funds pay more than smaller funds. The average basic salary of a portfolio manager is broad with junior portfolio managers featuring at the lower end of the pay scale. The median annual salary for an analyst was $73,150 in 2008 according to the U.S. Bureau of Labor Statistics. Experienced analysts are commensurate with fund managers. Fund manager basic salaries range from $84,000 to a high of around $200,000.
The bonus depends entirely on the fund. In some cases bonuses can push annual salaries up by more than 100 percent of the base salary for portfolio manager at a large fund. In general junior portfolio managers are less linked to the success of the fund but can still expect to receive 25 percent of base salary as a bonus.