Top Finance Career Options in India
Young students are curious and intrigued to know about finance. Almost the majority of the students want to get into finance. Little of them know what actually core finance is and the available core finance industries in India.
Here we will talk about different finance industries available in India and what are the educational requirements to get into these fields.
This will help you to get a better view of the core finance industry and also the differences between all of them.
1) Investment Banking:
We have already talked about Investing Banking as a career in our previous posts.
For the first time readers, Investment Banking is a service-based industry where an Investment Banker help companies raise funds, execute deals (both buy-side vs sell-side), and also advice on the capital structure of companies. Investment Bankers can be thought of like a middleman who connects people who require funds with investors.
Investment bankers use their wide network to close deals and earn hefty commission on the transactions. Not easy as it sounds though!
Check the skills required for Investment Banking here.
Some of the Investment Banks in India (not an exhaustive list)-
Bulge Bracket Bank- JP Morgan, Goldman Sachs, Credit Suisse, UBS
Boutique Investment Bank- Avendus Capital, O3 Capital, Mape, Spark Capital, JM financials
2) Private Equity:
It is an alternative investment class and it consists of funds that deploy their capital in private markets (i.e. invest in private companies). Private equity funds make money by charging management fees and performance fees from their investors (i.e. limited partners).
Check out our article on the difference between Private Equity and Investment Banking. Click here.
Some of the famous Private equity players in India- Blackstone, Baring Private Equity, Gaja Capital.
3) Venture Capital:
In the general sense, it is a part of private equity, the major difference between private equity and VC is that a VC invests in startups and private equity invests in a mature business. There are other differences like PE invests for a longer time frame than a VC. Also, VC invests small ticket cheques as it is investing in startups.
Some of the names in VC: Sequoia, Blume Ventures, Matrix Partners, Inventus Capital Partners, Accel Partners.
4) Hedge Funds:
Hedge funds are funds that are created to trade in liquid assets. Mostly, they invest or trade-in listed securities and assets. They are not typical funds that invest only in companies, a hedge fund might invest in a range of assets and securities like land, real estate, derivatives, currencies, bonds, artwork, and other alternative assets.
Hedge funds use complex strategies to gain profits and beat the markets. Hedge funds can accept money only from accredited investors and cannot advertise their funds.
We have discussed one of the strategies of hedge funds in our earlier post. Click here to check it out.
The hedge fund industry in India has not gained much momentum. Hence, there is only a handful of them operating in India.
Avendus has one of the largest alternative investment management fund with a total AUM in excess of USD 1 billion.
However, India hasn’t seen any full-fledged hedge fund like in the US. Some of the famous hedge funds in the world are Citadel, Bridgewater Associates, Man Group, Pershing Square
5) Portfolio Management Services:
This is one of the lucrative careers in the field of core finance. PMS is a tailored made professional investment service offered to cater to the investment objective of different investor classes.
PMS accepts money from HNI’s and institutions who can invest within a range of INR 25 lacs- 5 Cr (numbers can vary from PMS-to-PMS). PMS invests in stocks, bonds, cash, and other investment products according to the investor's choice.
This differs from mutual funds in the sense that PMS offers more flexibility and customization to investors as their accounts are managed separately.
It is the same as direct investment into capital markets through your own Demat account, with only one major distinction that your money is managed by a professional.
Some of the famous PMS in India are Marcellus Investment Managers, Kotak PMS, Motilal Oswal PMS.
6) Mutual Fund:
This is the most common core finance industry in India. The mutual fund industry has grown to new heights in the last couple of years. We need not mention much about this industry as many of you know about it. Just to put it in the simplest form, mutual fund pools money from the public and invests in the capital markets, and the investors are allotted units based on their investment and current NAV.
However, to know more about mutual funds click here.
And, to know how to choose the right mutual fund click here.
7) Stock Broking:
Stockbroking firms trade securities on behalf of individuals and institutions. Nowadays, these firms provide Demat account services to clients that form the basis for trading or investing in stock markets.
Stockbrokers are professional traders who buy and sell shares on behalf of clients.
HNI investors prefer full-service brokers that provide other services like wealth advisory, and other advisory services related to personal finance.
Some of the famous stockbrokers are Zerodha, Upstox, Angel broking, ICICI Direct.
8) Investment Advisor:
Anyone who wants to make a solid career in finance should not ignore this option. Investment advisors are professionals who provide investment advisory services to clients. They don’t create funds or manages client’s portfolios (generally) rather they advise clients on which fund to select, which products to invest in, which PMS should be best considering the client's goals, which insurance is best, etc.
There are also some sophisticated investment advisors who advise accredited investors to choose the best private equity fund, hedge funds, VC funds, etc.
Investment advisors can be an institution or an individual professional who guides you to select the best plan and product according to your goals and risk profiling.
With the change in demographics among the investor community, the new generation investors (millennials) are accepting to pay advisory fees to select the best products rather than the earlier trend of investing in products based on free tips or advice from agents and bank managers who had vested interest in the form of commissions on the product sold.
Therefore, this will be a huge opportunity for aspiring finance professionals who want to cement their position around investment advisory.
Educational Requirement for these lucrative fields:
Investment Banks and Private Equity mostly hire from top B schools in the country, CA’s, CFA for their front end roles. Also, to put some more context most of the private equity professionals are ex-Investment Bankers. Stay tuned we will come up with a detailed post on this.
Hedge Funds: They have a very slim team. Therefore, they hire mostly ex- Investment bankers, experienced equity research analysts, or sometimes maths graduates. This depends based upon the strategy used by the hedge funds. There might be some outliers who made into a hedge fund right after college but those are one in a million cases.
Venture Capital: The hiring process is almost similar to that of IB or PE. However, a lot of VC funds in India hire ex-founders, undergraduates, or even someone who had prior experience in a successful startup.
PMS, Mutual fund: These domains are crowded mostly by CA’s and CFA’s. If you want to make a career in these fields, CA+CFA would be a deadly combination. In India, most of the successful PMS and mutual fund managers are Chartered Accountants and CFA’s.
Investment Advisors: Qualifications such as CFA, CA can be a good option. Also, you can get certifications such as CFP, NSE certified courses can also be a good add on.
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Disclaimer: The names that are mentioned above are for knowledge purposes only.