|Careers in finance and financial services: Profile of a fund manager
|Anthony Linehan, B.A., M.A.,is head of fixed interest, portfolio risk and management, and director at KBC Asset Management. He says that the primary skill required to be a fund manager is an analytical mind one which can analyse a lot of data, get to the key points, or drivers, be this in regard to a company or a country/economy. An abiding interest in the world around you is also an essential attribute.
|What is your educational background? I was educated by the Christian Brothers in Cork (Sullivan’s Quay and Colaiste Iognaid Ris) and went to UCC to study Arts specialising in History and Economics. I graduated with a BA in 1982 and a Masters in Economic History in 1985.
How did you get into fund management? Like all good Cork men I initially joined the Civil Service working in the Department of Finance where I learnt the practical side of economics and worked with some truly outstanding people. I left there having been recommended by a colleague as I was interested in the financial markets and the management of money, and joined AIIB (now AIBIM) in 1987, not too long before the crash which was an interesting time in financial markets!!
Are your peers from similar backgrounds? No. In financial markets you find people come from many different academic backgrounds. Here in KBCAM we have engineers and a Doctor of Chemistry. Usually however, those involved in the bond market tend to have an economic and/or mathematical background.
What has been your career path to date? Having worked as an economist in the Department of Finance, I moved to AIIB and worked as part of the bond team there. After two years I moved to Riada Stockbrokers (now ABN-AMRO) to see the other side of financial markets as a stockbroker. Though I enjoyed my time working there, especially with the people I worked with, I decided I much preferred managing money, and so after three years moved to Wuerttembergische Portfolio Management Company (WPMC), which was a German firm in the IFSC managing international money. This was particularly interesting as it moved me away form the domestic bond market and economy into international bonds.
In 1994, I moved to UBIM to head up their fixed interest team. Although the firm changed ownership KBC Bank and Insurance Group bought UBIM in 2000 I am still here at KBCAM. I became a director of KBCAM in 2000.
Have you worked abroad and would you do so again?
No. I never worked abroad and the way my career developed the issue never really arose. However, looking back, I regret that I never worked abroad. I would certainly encourage anyone starting today to go abroad for a few years for the experience. Nevertheless, I would only like to have spent a short period abroad as I like living in Ireland and believe there are good career opportunities here.
Clearly, given the size of markets in the London and New York, there are greater opportunities there, particularly in specialised areas. Dublin has grown considerably as a financial centre during my career and now there are also lots of opportunities here. I think we should think less about the job opportunities abroad but consider more how to attract those jobs here, given how transportable the financial industry is. The IFSC is already quite a success in this regard.
Have you undertaken any additional professional training since becoming a fund manager? Given the constant changes in this industry, training is ongoing. Every year I try to do a few courses to enhance my knowledge. Much of the education is of course by way of constant reading. I have not however done any courses to degree level.
What skill/aptitude would you identify as being key/beneficial to a career in fund management? There are many jobs in the fund management industry such as client servicing and compliance etc. but I am going to confine my answers to those jobs directly involved in the management of money. The primary skill required is an analytical mind one which can analyse a lot of data, get to the key points, or drivers, be this in regard to a company or a country/economy. You need to have the ability to be able to make a decision without perfect information. By the time the information is fully available, the financial markets will have fully priced in whatever you are looking at. Therefore you have to make assumptions and judgements and live with the fact they may be wrong. Finally, you need to have an abiding interest in the world around you and how it interacts. I have seen many fund managers from different backgrounds but I have never seen a good one who did not have this last attribute.
What aspects of the job do you like most? Bond markets especially are concerned with economics and global events. If equities are more concerned with the micro i.e. company specific news, then bonds could be described as more the macro debate. However, I accept that these are simplifications. For someone interested in history, economics and politics, to have the opportunity every day to analyse same and to make judgements on the outcome is hugely rewarding. To give a more specific example, you might question what effect the American election will have on bond markets - will it mean higher or lower Government Debt leading to higher or lower bond issuance? Will it mean a more stable world and lower oil prices and lower inflation? Or will America become more protectionist and will that lead to higher inflation? Will the economy be stronger or weaker? All these questions interest me naturally and it is a real joy that I can spend my day looking at these and get access to some great brains thinking on the same subjects.
What aspects of the job do you like least? Administration. I accept that administration is a very necessary part of what I do, however I cannot say that it gives me any great enjoyment. It is just something that has to be done. My pet hate is meetings that go on too long.
Where would you see yourself in five years?What is your goal in fund management? How do you define success in fund management? I would like to see myself here and still very much involved in bond markets. Since the creation of the euro the bond market in Europe has evolved and now there are more developed markets in different types of bonds such as corporate bonds, convertible bonds and index-linked bonds etc. These offer more opportunities to match a client’s needs and requirements. In the KBC Group we have strong management in all these areas and one of my ambitions over the next few years is to bring this wealth of skill to our Irish clients.
My personal goal in fund management is to be able to bring a solution to our client that matches their needs and having done so to manage their portfolio to add value. To give a practical example: you find that, having discussed with a client; their fund has a natural life of 10 years but has a limited appetite for downside risk. In this case, you may manage the fund against a 10-year benchmark but take a very conservative stance when markets are weak. It is important to be very clear with a client what can be achieved and what the risks are.
Success in fund management is very clear and there is nowhere to hide. In bond markets, bonds are gathered into various indices. A common one used in Ireland by pension funds is the Merrill Lynch Sovereign over five years. This index consists of all the liquid bonds issued by euro member governments and with a maturity greater than five years. The aim of the fund manager is to beat the index by picking bonds which either by virtue of their maturity or country will outperform the index. 0If you cannot do so, then you are not adding value. The returns will quickly show whether you are succeeding or not. However, I should add that no one should expect to get it right all of the time and the biggest skill in asset management is in how you manage those decisions you get wrong; your ability to recognise that you have got it wrong, and your ability to move forward.
Is there anyone in particular you admire in your industry? I have been lucky to work with many excellent people who have taught me a lot and I have always been impressed by the quality of the bond managers in Dublin. I have a lot of respect for my rivals like Mick Grace in AIBIM and Ronan O’ Donoghue in BIAM whom I have known for a number of years, and with rivals like that you have to work hard if you are to outperform.
What advice would you give to others who might like a career in fund management? Ask yourself if you have a broad range of interests, an analytical mind and the ability to make decisions. As I mentioned already, can you accept that you will occasionally get it wrong and maybe more often that you will like and can you live with this pressure and rise above it?
If the answer to all the above is yes, then having done a basic degree, consider registering for the CFA Exam Program (which can be done while working) or a Masters in Finance. Get a job in a fund management firm and see how the whole process of money management works and then build up your skills and look for opportunities to move into the area of fund management you really want.
In what areas are there the most opportunities in Dublin e.g. fixed income/equities /hedge funds etc? There are probably more opportunities on the equity side especially as an analyst, but that said, the opportunities in fixed income have greatly increased in the last number of years while hedge funds are very much in favour at the moment. However, I believe that a career in hedge funds should follow a period of managing either equities or bonds.