Technical graduate Asset Management interview questions?

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Vallern
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So yeah, I figure that it would be a good idea if everyone could pitch in on common technical investment management questions that one would encounter when applying for a graduate position or internship. I mean aside from picking a stock, can anyone else enlighten me at what else I might encounter? Can these questions get overly hard? Are they usually based on accounting/valuation methods?
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gr8wizard10
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a client gives you £1m, how and where would you invest it?
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Vallern
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(Original post by gr8wizard10)
a client gives you £1m, how and where would you invest it?
When asking this question, are they looking for specific asset reccomendations like for example long EURO|USD, and buy Google, or are they looking for answers like 50% stocks 30% bonds, 20% cash, assets with low correlation, bullet bond portiofolios, emerging market etf, etc etc
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gr8wizard10
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(Original post by Vallern)
When asking this question, are they looking for specific asset reccomendations like for example long EURO|USD, and buy Google, or are they looking for answers like 50% stocks 30% bonds, 20% cash, assets with low correlation, bullet bond portiofolios, emerging market etf, etc etc
the latter.. but you have to prompt question like.. who's the client, how long is the investment horizon, would they require periodic cash extractions, what is their risk tolerance.. which will help you structure a more appropriate answer depending on their needs.

**also you can earn extra brownie points by understanding the various portfolio construction techniquesyou could approach with and explain why you'd use that for the specific client i.e. min variance approach, LDI approach, CPPI approach, trend following, strategic and tactical allocations. also if you have economic understanding maybe explain diversification in classes and how you'd implement it for said client, i.e equity style rotations. and you could perhaps even talk about specific strategies you could use i.e market neutral strategy, statistical arbitrage, depending on whether your client wants to take no market risk (absolute return) or take market specific risks (relative return).. and it would be beneficial to explain how you would also track the perfromance of the portfolio by maybe mentioning the benchmarks you'd use on various strategies. this would all depend on how deep the question goes, which i assume would be dictated by your level of understanidng on the topic and how seasoned your answer is.
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Vallern
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(Original post by gr8wizard10)
the latter.. but you have to prompt question like.. who's the client, how long is the investment horizon, would they require periodic cash extractions, what is their risk tolerance.. which will help you structure a more appropriate answer depending on their needs.

**also you can earn extra brownie points by understanding the various portfolio construction techniquesyou could approach with and explain why you'd use that for the specific client i.e. min variance approach, LDI approach, CPPI approach, trend following, strategic and tactical allocations. also if you have economic understanding maybe explain diversification in classes and how you'd implement it for said client, i.e equity style rotations. and you could perhaps even talk about specific strategies you could use i.e market neutral strategy, statistical arbitrage, depending on whether your client wants to take no market risk (absolute return) or take market specific risks (relative return).. and it would be beneficial to explain how you would also track the perfromance of the portfolio by maybe mentioning the benchmarks you'd use on various strategies. this would all depend on how deep the question goes, which i assume would be dictated by your level of understanidng on the topic and how seasoned your answer is.
I'm pretty familiar with most of the things you mentioned above (as they were part of the IMC curricullum) and I thank you for the extensive answer. Seeing that you have experience regarding these questions, my final question towards you would be how deep would they expect you to go when answering these technical questions. Are they challenging for non-finance degree graduates (economics graduate myself)?
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gr8wizard10
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(Original post by Vallern)
I'm pretty familiar with most of the things you mentioned above (as they were part of the IMC curricullum) and I thank you for the extensive answer. Seeing that you have experience regarding these questions, my final question towards you would be how deep would they expect you to go when answering these technical questions. Are they challenging for non-finance degree graduates (economics graduate myself)?
depends on the depths that you'd go in answering them, they look for people who can think logically with regards to these questions, and how you'd formulate an allocation based on your understanding of the clients needs.
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IBMentor
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Hi Vallern,

When it comes to technical questions you must only introduce concepts that you have a basic understanding of. If you mention statistical arbitrade or CPPI an interviewer could logically ask you what those are in layman's terms so make sure you can answer.

For asset management I would expect the following to come up besides the usual fit questions:
- Basic concept of risk and performance measures (i.e. Max Drawdown, Time to recovery, Sharpe Ratio, Information Ratio...)
- Know the difference between the various styles of investing (i.e. value, growth, GARP...)
- Know the basics of valuation and the three financial statements
- If the role is related to equities have a couple of stock pitch ready with valuation, growth drivers and industry competitive dynamics in mind
- Be prepared to answer a question about how you would invest $100 million, basic asset allocation question which will also test your macro understanding and show that you are following current events

I hope this helps.

Jonathan
Founder of IBMentor
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