Risk/Reward of Liquid Credit Research Vs Credit Risk
Hope to generate a discussion on the risk/reward of both careers as I've recently learned credit risk has comparable pay to credit research at the director level (around 400k while my seat in IG credit pays 400-500k). I also believe the path to PM from a sector specialist is orders of magnitude harder than hitting MD in credit risk - the competition seems to be significantly weaker in credit risk and people move around a lot more, creating opportunities for promotions. Once you're an MD in credit risk, you're looking at credit at a portfolio level anyways.
The trade-off is there will be more admin work and no short-term incentive to 'outperform' the market. However, the career volatility might be lower especially with way more seats available compared to shrinking liquid credit investment seats.
Am I crazy to think credit risk might have better risk adjusted returns than credit research?
Location is a big factor here, most banks have been offshoring credit risk to varying degrees
GS / JPM / Citi have basically cut those roles in NYC and forced them to Plano (DFW)
Other banks have low cost India, etc teams helping support the credit function
Credit risk at a bank in an IG sector / focus is not a safe career - really don’t need to pay people $400k for that with MD headcount
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