Equity Research or Credit Research

Hi everyone,


I recently received two internship offers, one for HY credit research and one for equity research (both BB). I have a lot of interest in both asset classes and don’t know which one to pick. Long term I am fairly certain that I will eventually want to work at a HF because I want to take on risk. Ideally I would like to work at a fund that takes positions in both asset classes, not strictly equities, that is what led me towards HY credit. I know a lot of people say it is easier to switch from credit to equity than the other way around but I wanted to see if anyone has an opinion on this. Which one will have more exit ops to HF? Which one will provide a better all around skill set? If I choose either one will that limit me strictly to that asset class when it comes to exit ops? Any other opinions on the two choices would be great as well.


Thank you!

 
Most Helpful

They’re quite different in terms of skillset and knowledge base. Equity is about finding alpha and maximizing upside while credit is about minimizing risks. Credit research requires more in-depth and intense modeling skills but typically relies a lot of inputs from equity analysts for their research. On the other hand, Equity analysts rarely use information from credit analysts for their research. From industry knowledge perspective, equity analysts should have a better sense of the ins and out of company drivers than credit analysts. But from a technical/ deep financial modeling perspective, credit analysts are most likely better than equity analysts.

 

ER definitely better if you want to land at a multi-manager like Citadel, Millennium, etc doing L/S equity. Credit will have more varied exit opps within the credit space. I am biased but think credit is a better career path unless you are a stock junkie who really wants to bet on your ability to generate L/S alpha at a multi-manager

 

If your goal is doing both, I would do credit. You don't learn credit skills in certain sub styles of equity, but doing HY is as fundamental analysis as deep-value / traditional value equity and you can develop cross capital structure skills at the right buy-side shop down the road. 

The only risk (doesn't seem to be for you based on your goal) is it's very difficult to move from credit to growthier public equity investment styles. 

 

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