11. Interview with a Portfolio Manager

1. Before listening Imagine you have a lot of money. How to make a safe investment? Decide which companies and sectors of economy you would like to invest in.

a) by the type of investment;

b) by the sectors of economy;

c) by type of securities (e.g blue chips, junk bonds etc.).

2. Before listening Match the terms used in the interview with the definitions.

1) asset management 2) bonds 3) commodities 4) diluted 5) diversify (risk) 6) drivers 7) emerging (markets) 8) equities 9) investment bank 10) metrics 11) P/e 12) portfolio 13) price-to-book ratio 14) product pipeline

a) bank that helps companies by arranging new share issues and providing advice b) collection of investments c) key factors that cause situation to change d) long-term debt sold to investors by companies e) made less strong by the addition of something else f) markets in a transitional phase between ‘developing’ and ‘developed’ g) parameters / criteria used for measuring h) products in preparation, but not yet launched i) products such as oil, coffee or metals j) ratio used to compare a stock’s market value to its book value k) ratio used to measure how cheap share prices are l) reduce risk by spreading it over different types of investment m) a service offering advice on investments n) stocks / shares (which represent ownership of a company)

3. Before listening Investment banks use different types of analysis to decide which companies and sectors to invest in. Put the key factors in the correct column.

key price points, macro trends, a company’s balance sheet, a company’s product pipeline, the economy, support and resistance levels
Bottom-up analysis	Top-down analysis	Technical analysis

4. ҉ When listening Now listen to an interview with Jo, a portfolio manager in an investment bank, and check your answers.

5. ҉ When listening Are these statements true (T) or false (F)? Try to remember what Jo said, then listen again to check.

	True	False
1. Jo’s investment bank manages all the capital in the clients’ pension funds.
2. Jo only manages investments in Japanese companies.
3. Jo, as portfolio manager, has a broader view of the market than the analysts.
4. If a company issues a profit warning, you should sell all your shares very fast.
5. Issuing new shares dilutes the value of the existing shares and so always makes the share price go down.

6. ҉ When listening Listen again and make notes on what Jo says about the following topics (maximum ten words each). When you finish, discuss the general issues with some colleagues.

• the liaison between client and portfolio manager

• what gives Jo’s investment bank a competitive edge

• headaches for a portfolio manager

5. ҉ When listening Below are Claudia’s answers to the interviewer’s questions. Fill in the gaps in the sentences.

1. Investment banks advise companies on financing, and on __________ and ________. I personally work for the ________ arm of the bank…

2. We offer them the ability to earn high investment _____________ and to ____________ their risk.

3. The manager of their ___________ will be completely different again.

4. So for instance if we believe in strong personal ________ over the next three or four years, then …, or …, we are unlikely to _________ in some of the auto stocks.

5. …and we focus very heavily on the ability to _________ those returns going forward. … Basically these are all metrics that we use to find stocks where the ____________ is appealing.

6. I listen to the analysts and decide on how to make up the __________ for the whole market.

7. You find that technicals are used more in areas like ____ and ____ …

8. If you think it’s a structural ____________, then you need to sell your holding… If it’s temporary, then normally you’ll be … looking to __________ the market which you think has an incorrect __________ of events.