Portfolio Management interview prep.

Behavioural questions to expect

1. Walk me through your CV.
2. Tell me about the best investment decision you've owned — or contributed to.
3. Tell me about a weakness, a failure, or feedback you've received and worked on.
4. Why portfolio management — why the PM seat and not staying in research?
5. Why the firm?
6. What's your investment philosophy and approach to building a portfolio — and why does it fit the firm's?
7. How would you describe the firm's investment process, construction, and edge in your own words?
8. Why should a client pay the firm for active management over an index fund?

Technical concepts to master

• The three core valuation methodologies

  Discounted Cash Flow (DCF) · Public Company Comparables (Comps) · Precedent Transactions · When each is most relevant · Methodologies you specifically would NOT use

• Portfolio construction

  Top-down vs bottom-up · Concentration vs diversification · Positioning vs the benchmark · Strategic vs tactical allocation

• Risk budgeting + factor exposures

  Risk budgeting · Marginal contribution to tracking error · Factor exposures · Unintended bets

• Performance attribution

  Allocation vs selection · Interaction effect · Skill vs luck

• Sell discipline

  The three sell triggers · Trim vs exit · Opportunity cost

Practical drills

• Two sectors. The benchmark holds Tech at 50% weight (+10% return) and Staples at 50% (+6%). Your portfolio: Tech 70% weight, +12%; Staples 30% weight, +6%. (a) Portfolio and benchmark returns? (b) Decompose the active return into allocation, selection, and interaction.
• You're handed a mandate: beat a broad equity benchmark, ~4% tracking-error budget, no single position above 6%, reasonable liquidity. Build the portfolio from your best ideas. How many names, how sized, what does the risk look like vs the benchmark?
• Your highest-conviction idea has ~40% upside but it's a volatile mid-cap, it's a 0.5% weight in the benchmark, your cap is 6% per name, and it's correlated with two names you already own. How big do you make it, and why?

Smart-question anchors

• Decision + sizing process - how ideas become positions, who sizes them, and how conviction maps to active weight vs the benchmark
• Risk framework - the tracking-error budget, position / sector / factor limits, and how unintended bets are monitored
• Construction + concentration - number of holdings, max position, and how concentrated the book runs
• Attribution + review - how performance is attributed (allocation vs selection) and how the team learns from drawdowns
• PM autonomy + team - how analyst ideas feed the book, how much discretion a PM has, and the path / apprenticeship to running money

Sourced from

Mergers & Inquisitions — Asset Management Interview Questions · Wall Street Oasis — Asset Management Interview Questions · Financial Edge — Portfolio Management Interview Questions · CFA Institute — active management, attribution, fundamental law · State Street Global Advisors — The power of the information ratio in active management