Fixed Income Research vs. Equity Research

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monkeyd00d

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Hey Everyone,
I have a choice between Fixed Income Research and Equity Research at a BB in New York. This is an entry level position. What are the pros and cons of each? Interested in learning experience, career progression, potential other opportunities that it might lead to, pay, etc.
Thanks
 
The particular product within fixed income makes a big difference.
Credit (particularly HY) shares a lot of characteristics with equity.
RMBS, CMBS, commodities, currencies, etc.. are very different from equity research.
Given the big differences, exit opportunities and career progression can vary dramatically. At the undergrad analyst level pay should be very similar, if not identical, across all products.
 
Could you elaborate on the differences in the exit opportunities for Structured Finance vs let’s say High Yield?
I currently have about 2.5 years of SF (buy side) experience. Would it be possible for me to switch to High Grade or High Yield later on, or I will get labeled?
Thanks
 
MonkeyDood - is this a graduate program you have been accepted to that you can choose your position? It seems like a nice situation to find yourself in. Well done on getting the offer.
I would say most people getting into finance would prefer to work on the equity side as it is seen as more glamorous. When people watch CNN and talk casually about the market, they are generally looking at equity prices first. That’s not to say there are not good opportunities in FI too. It really comes down to preference. Remuneration would be fairly similar in both for positions of equal seniority I would have thought. Possibly the equity side would pay slightly better. Have a look at the CFA salary survey for more details on that side of things.
Have you taken CFA level 2 yet? You should get a reasonable idea from that the kind of things involved in FI and equity analysis. You could also read security analysis by Graham for a basic overview of both.
 
krnyc2008 Wrote:
——————————————————-
> Could you elaborate on the differences in the exit
> opportunities for Structured Finance vs let’s say
> High Yield?
> I currently have about 2.5 years of SF (buy side)
> experience. Would it be possible for me to switch
> to High Grade or High Yield later on, or I will
> get labeled?
>
> Thanks
I can’t speak too much about the exit opportunities for structured finance roles. The ability to transition from a structured background to a single name role (equity/IG/HY) would be easiest:
1) when at a large firm (buyside or sellside), as its easier to build the network necessary to transition internally
2) when early in your career. Spending 2 years as an analyst out of school in one product is unlikely to prevent you from transitioning to an associate level role in another product.
If you’re not at a large firm (and by large, I mean one that doesn’t specialize in just structured products), it will likely be a more difficult transition.
 
Thank you for your input!
I am at a fairly large firm with the groups covering virtually all FI sectors. However it’s not common in my company (at least from what I’ve seen so far) to switch groups/products. Therefore, I am bit concerned I will get stuck with SF sector, especially given the uncertainties that the sector is facing.
Would you recommend applying for junior analyst jobs at others places now, or doing the MBA first for an easier transition?
Thanks
 
@ Carson
It is a program for people just out of undergrad. Group placement will take place during training during which you can put in preference for FI, equity, or macro research, as well as the specific industry you want to cover.
My concern is what will be the best skill set. Will FI research pigeonhole me or give me too broad of a skill set?
Say I cover consumer broadline stocks on a pretty good team. Consumer analysts are all over the place. I think it would be a very interesting industry to cover, but there are so many people covering it. FI might differentiate me a little more and make me more valuable to the bank or to hedge funds down the road. What do you guys think? Also, FI entails taking some prop risk with the traders and covering more companies. Equities is usually 12-15 companies per team.
 
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