Equities vs Fixed Income, entry level job

Do you think it is better to work with equities or fixed income out of college and beyond? Looking to hear about job opportunities as well as compensation.

Case for bonds:
- Better demand in the next half decade due to investment environment
- Many more jobs (especially internationally) related to FI than equities
- More AUM across the board in FI products
- Performance is based on strategy as opposed to good research

Case for equities:
- More speculative (can be seen as negative) and difficult to outperform peers
- More moving parts
- ??

Obviously I am leaning towards FI but I wanted to hear your opinions.

 

It is for ER vs bond analyst. Although most of my experience and involvement has been with stocks, I like bonds as well. As for any specific products interesting me - I really just like investing. Maybe I see bonds as a more attractive investment for the next couple of years that is why I am leaning this way (however wrong this may be). The thing is some companies have equity positions as well as fixed income positions and it is hard to have to pick just one to apply to. As I said I like all investments and wish I did not have to choose which path to go down at this point (recently out of undergrad).

Thanks for the reply and although I am looking for advice to help me out I would be willing to hear more general replies as well.

 
Best Response

First of all, you need to specify more. It´s not the same comparing ABS structuring to Cash Equities than comparing govis to converts for example.

By the way, I disagree or don´t understand your points. -I don´t see how you´re so sure about "better demand in the next half decade". This has been covered a thousand times, there´s no such thing as a hot desk/group/prouduct. Hell, 4 years ago everyone wanted to do CDOs and MBS. -What do you mean more jobs related to FI than equities? -More AUM across the board in FI products? What does that mean? -FI research is generally huge in any bank, and it is as important as in equities. BTW, if you are referring to banks, research is done for clients in order to get them to trade through the bank. Traders and Salespeople read it, but they do whatever they want and recommend their clients what THEY think, not what research thinks. -Equities and FI can be as speculative as you want, I don´t see how it differs... -More moving parts in equities?? It´s probably the opposite. FI is much more macro, which means everything affects everything. A rainy season in Malaysia can affect the price of your Colombian bond.

I think if you don´t want to distinguish products, the only difference is macro vs micro. If you like analyzing macroeconomics (interest rates, sovereign debt, exports, imports, etc...) go for FI. If you are more interested in analyzing companies (product development, managers, results, bet on a revolutionary technology, etc...) go for equities.

 

"I think if you don´t want to distinguish products, the only difference is macro vs micro. If you like analyzing macroeconomics (interest rates, sovereign debt, exports, imports, etc...) go for FI. If you are more interested in analyzing companies (product development, managers, results, bet on a revolutionary technology, etc...) go for equities."

This is what I was looking for. Your points on being specific are well taken. I am referring to High Yield bonds versus say a typical ER role, although I understand that even these can be vary different depending on where you work.

Re: demand in 5 years. Yield on some TAX FREE fixed income products are above 7% and when you compare that to the bullish promises of 9% PRE TAX historical returns on equities I think it is easy to see where demand will go. Just my opinion but a valid one at that and not something I want to turn the attention of this thread towards, as I am sure there are other opinions on this topic.

 

I have an interview for an entry level ABS analyst in the FI department of a AM that has over 150B AUM. Currently I am an analyst on a Wealth Mgmt group at a top 4 Firm. I am Level 1 CFA and looking to eventually be a PM or atleast travel down that path. Any advice for the ABS interview or the PM route in general?

Thanks

 

I told them I traded equity since the age of 14, thus I am very familiar with them. I made sure to mention why I love equity: Here you can just tell them how equity is a reflection of a company, how it fascinates you how a company's reputation reflects in the price of a stock. (They might ask you, but what about Moody's rating etc... Here you can just tell them that those ratings are slower to adjust, where as market forces for equity is instantaneous). Get my gist?


Remember, you will always be a salesman, no matter how fancy your title is. - My ex girlfriend

 

I'm giving my 2 cents anyway. If you think you like fixed income better, than that is where you dhould be for your SA position. But I think you would be well advised to keep your eyes and ears open to all paths this summer. Very few students know, or should know, what products or divisions, or for that matter if Wall Street generally, is right for them. Be open-minded. Real success on Wall Street is a marathon, not a sprint.

 

Do some research in their actual products. See what you like. Most of the information here is mud slinging between Equities and FI people. It is a personal choice. People do say the FI people are smarter or the market is bigger. But this year, FI is under fire. For sales, I would say, a good salesman can sell snow to an eskimo.

Many of the banks have a rotational programs across the board, hence you can see for yourself.

 

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