What Skills are Required to Become a Great Portfolio Manager?

What Skills are Required to Become a Great Portfolio Manager? | Finance | Emeritus

According to Warren Buffett, the key to smart investing is not putting all your eggs in one basket. This is called diversification. It refers to investing your money in diverse assets like cash, stock, bonds, and real estate in order to minimize risk. This spread of investments is termed an investment portfolio, and the individual who helps you manage it is called a portfolio manager. 

Portfolio management is similar to asset management. However, it requires advanced financial knowledge and skills. This is why companies and individuals need portfolio managers. Let’s discuss what does a portfolio manager do, and what skills you need to become one.

ALSO READ: What is Asset Management? Does it Ensure Business Growth?

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Responsibilities of a Portfolio Manager

A portfolio manager’s primary responsibility is managing investment portfolios to help clients achieve their investment goals. Simply put, portfolio managers are professionals who help individuals or institutions in strategizing their investment plans, minimizing risk, and getting higher returns on different financial assets. If you are still wondering what does a portfolio manager do, here are their key responsibilities:

  • Preparing investment strategies and plans as per the client’s investment goals, current investments, and financial resources
  • Creating and managing assets funds
  • Educating the client about potential investment opportunities and risks involved 
  • Observing market trends and researching fund structures
  • Measuring investment portfolio performance using financial ratios
  • Making strategic decisions regarding the purchase or sale of assets based on the market situation 

Construction Finance Management at Columbia Engineering Executive EducationTypes of Portfolio Management

Depending upon the client’s investment goals and plans, portfolio managers undertake four types of portfolio management strategies. They are:

Active Portfolio Management

A strategy focuses on high returns. Active portfolio managers constantly evaluate the market for opportunities to buy assets at low prices when they are undervalued and sell these assets at high prices in the future. An active portfolio management strategy requires portfolio managers to have expertise in quantitative market analysis. Since active portfolio management has the potential to generate higher returns, the risk factor is also high.

Passive Portfolio Management

As opposed to active portfolio management strategy, passive portfolio management involves low risk. It also generates low returns in comparison to active portfolio management. Portfolio managers and investors adopt a low-risk, low-return strategy to ensure stable and passive income from investment assets.

Discretionary Portfolio Management

In a discretionary portfolio management strategy, the portfolio managers have complete discretion or freedom to make investment decisions on their client’s behalf. Portfolio managers use their expertise and skills to manage complete control of a client’s investment portfolio.

Non-Discretionary Portfolio Management

In this type of portfolio management, portfolio managers do not have complete discretion to make decisions for a client’s investment portfolio. They merely act as financial advisors and share their knowledge and expertise with the clients to help them make sound investment decisions and minimize risk.

The Purpose of Portfolio Management

Another essential purpose of portfolio management is to increase wealth over time. It also helps achieve the following objectives: 

Capital Appreciation

The primary reason why people invest in financial assets like stock and real estate is because of capital appreciation. Investment assets generate returns over time which result in capital appreciation. These assets ensure financial stability at the time of high inflation or recession.

Risk Minimization

Minimizing risks and getting stable returns is another essential objective of portfolio management. Passive portfolio management reduces risk and generates fixed monthly or annual returns for investors.

Tax Planning

Returns generated from investments are considered income and are taxable. This portfolio helps in tax planning and reduces tax liability by diversifying investments in low-tax or tax-free sources like pension funds and life insurance.

Qualities of Good Portfolio Managers


Portfolio managers should be proactive in market research to keep themselves updated with market trends and economic conditions.

Excellent Organization Skills

Portfolio management is a complex role that involves a lot of figures and statistics. It is essential for portfolio managers to organize data efficiently.

Advanced Knowledge of Analytics

Excellent data analytics and interpretation skills are vital for portfolio managers to prepare effective investment strategies.

Portfolio Manager Skills

Now that you know what does a portfolio manager do, let’s understand the skills and areas of knowledge they need to have proficiency in to perform their responsibilities:

  • Financial modeling
  • Equity analysis
  • Private equity
  • Investment research
  • Asset allocation
  • Hedge funds
  • Business development 
  • Risk management
  • Project management
  • Customer service
  • Credit analysis

In addition to these technical skills, portfolio managers also need excellent soft skills like:

  • Communication skills
  • Analytical skills
  • Problem-solving
  • Decision-making
  • Ability to work independently 

The Career Outlook for Portfolio Managers

Job Description

To help you understand what does a portfolio manager do, the following are the set of responsibilities mentioned in a majority of portfolio manager job descriptions:

  • Outlining the investment goals and objectives of the client and preparing an investment strategy
  • Purchasing and selling securities on the client’s behalf
  • Creating and managing investment portfolios to keep up with market trends
  • Maintaining client relationships and discussing the performance of investment portfolios with them.

Portfolio Manager Salary

A portfolio manager’s average annual base salary in the US is $80,648. Portfolio managers with 5-6 years of experience in the US draw an average annual salary of $133,965.

Top Companies Hiring Portfolio Managers

According to Indeed, the top companies in the US hiring portfolio managers are Genentech, Leidos, NCS, Capgemini, and Meta. You can also apply for portfolio manager positions at BlackRock, State Street Global Advisors, The Vanguard Group, Fidelity Investments, and Goldman Sachs. 

There are currently 461,606 portfolio management professionals in the US and the career path to becoming a portfolio manager starts from the role of a financial analyst. According to the US Bureau of Labor Statistics, financial analyst jobs, which include portfolio management, are expected to grow by 9% from 2021 to 2031. Hence, portfolio manager jobs are also likely to increase in the next few years.

Is Portfolio Management a Stressful Job?

Yes, the job of a portfolio manager can be quite stressful. Knowing what portfolio managers do, it becomes evidently clear that they have to deliver concrete results. There is unrelenting pressure on portfolio managers to ensure that investment portfolios perform well since their additional compensation or incentives are largely based on the overall success of the portfolio. The most significant reason for high stress is on account of consistent efforts being required to produce the best results in a highly unstable environment. This often causes anxiety.

The market size of the portfolio management industry in the U.S. was $390.9 billion in 2022. In the last five years, it has grown faster than the finance and insurance industry in the US, making it one of the most sought-after jobs in the US. It nevertheless takes several years for finance professionals to become portfolio managers. The most important factors for becoming a portfolio manager are an excellent knowledge of finance. Do opt for Emeritus online finance courses to enhance your skills and accelerate your career in portfolio management.

By Sneha Chugh

Write to us at content@emeritus.org

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About the Author

Content Marketing Manager, Emeritus Blog
Manasa is the content ninja that every brand needs. Apart from being an expert in tech-related trends and digital marketing, she has found her calling in edtech. Her 10-year-long tryst with education started with a teaching fellowship for underprivileged children, followed by a stint as an edupreneur. It gave her the perspective she now uses to create impactful content for Emeritus. Manasa loves the life of a digital nomad that allows her to travel and hopes her reels go viral on the Gram.
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