Brokerages also have equity research units made up of analysts and their helpers who research and recommend stocks. Research drives trading volume and lends invest- ment banks expertise and authority in the industries in which they specialize. LESSONS IN (MARKET) GRAVITY? Anyone considering a career in asset man- agement or retail bro- kerage should know that markets go up and down—some- times way down. One needs look no further than the Dow Jones Industrial Average to observe that volatil- ity. In July 2007, the DJIA crossed 14,000 and closed there for the first time in its history. (At 14,164.53, to be exact.) But over a year later, on September 29, his- tory books got a new entry, when the DJIA saw its greatest daily point loss of all time, down 777.68. And in March 2009, the Dow dipped below 7,000, a more than 50 percent fall from its record peak less than two years earlier. It was the first time the industrial average closed that low since 1997.
Careers in Asset Management and Retail Brokerage 8 WETFEET INSIDER GUIDE CHAPTER 1 AT A GLANCE CHAPTER 3 THE COMPANIES CHAPTER 4 ON THE JOB CHAPTER 5 THE WORKPLACE CHAPTER 6 GETTING HIRED CHAPTER 7 FOR YOUR REFERENCE CHAPTER 2 THE INDUSTRY Modern mutual funds got their American start in 1924 with the creation of the Massachusetts Investors Trust. Mutual funds experienced a period of growing popularity starting in 1990, with the number of funds nearly tripling during the following 20-year period. The U.S. mutual fund industry remains the largest in the world, with $11.1 trillion in assets. Many consumers see mutual funds as a lower-risk investment than stocks. Though the stock market volatility of the last few years left the mutual fund industry with a black eye—inves- tor demands declined in 2009—net assets did increase in 2009 by $1.5 trillion. Major players in the mutual fund industry include Fidelity Investments, The Vanguard Group, State Street, American Funds (a subsidiary of The Capital Group), and Legg Mason. ETFs—a newer breed of mutual fund that can be bought at lower cost and sold like stock— are offered by many of the same companies that offer mutual funds. There are more than 1,000 of them, but some doubt the merits of these low-fee, easy-to-trade securities, especially during periods of market shakiness. Retail Asset Management Retail asset management includes a host of services, primarily for high-net-worth individuals, that includes trusts and professionally managed accounts, in which the client consents to leave the investment decisions to the professionals. A client’s net worth or level of invest- able assets usually determines the level of service he or she receives, from call centers at the low end to personal bankers for high rollers. Those that cater to wealthy cli- ASSET MANAGEMENT COMPANIES Asset management companies are typically organized around mutual funds and run by portfolio manag- ers. Asset managers , also called investment managers or money managers, are responsible for investing the assets of a group, institution, or individual according to speci- fied management goals. These people have a coterie of
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