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Investment Management is not Investment Banking

Did you know that the investment management industry in Australia oversees more than $4 trillion? You might be familiar with the appeal of a career in investment banking, but that is only a small fraction of the investment management eco-system.

Investment management is a dynamic and rewarding profession that involves managing and investing capital in various assets, such as shares, property, or bonds, to generate returns and create value for clients and society.

You can work for different types of organisations, such as banks, superannuation funds, insurance companies, not-for-profit organisations, or family offices. They can also focus on different asset classes, sectors, regions, or strategies, depending on their skills and interests.

This multi-part series will demystify the investment management industry and help you understand the different players in the industry and how to find your own career path.

What is the Investment Management Eco-system?

When you think about investing, you might think of Bitcoin, Tesla, Meta and Alphabet. But institutional investing operates at a much higher level and you already have some exposure to it, through your super fund (if you have a job)!

You entrust your savings to super funds, investment trusts or insurers, and hope to get a return or payout in the future. These are what the industry calls asset owners. They pool funds and then allocate them to various assets (such as shares, property, alternatives, and bonds) and to specialised fund managers (also known as investment managers).

The specialised fund managers then invest the money they receive in the underlying assets. This provides diversification benefits at multiple levels. It is one of the few ‘free lunches’ that you should have learned about at university.

Investment banks help companies raise equity or debt capital by selling to these specialised fund managers (equities or bonds), or support their institutional clients with mergers and acquisitions, and collect a nice fee along the way. Investment bankers lend their corporate finance services to clientele ranging from startups to established organisations and, in some cases, even governments.

We have created a short video that explains the investment management eco-system in more detail, see link.


What’s next?

In the following articles, we will (1) elaborate on the role of each participant, (2) describe the different roles in the industry and their potential career paths, including their compensation, and (3) suggest what you can do now to start your career journey.


Author: Frank Li, Portfolio Manager, Diversified Portfolios at MLC.


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