Fixed Income AM
I’m going to say my knowledge of fixed income investing is solely based on what I learned at school and I have zero experience in the field.
I think fixed income is a far more interesting and vast field than equities. I’m too ignorant to understand the fundamentals behind investing in fixed income. How does a company like PIMCO invest, for example? Fixed income was something that got way too quantitive and complex really fast in uni. I’m wondering if successful investing in fixed income relies primarily on things like matching durations, predicting the yield curve’s movement, butterflies, etc.
Is it also a “safer” place to be in the LO companies?
I think your question is too broad to be answered meaningfully. For example PIMCO has so many products from inflation-linked etfs to some stuff that offer you exposure to hy/ig corporate bonds that's very different from one another. Based on what you said you are probably referring to rates - but even in rates you'd have so many different products and investing approaches. You can be super discretionary like just do an outright long in the frontend treasuries simply because you have a view on the market's pricing on the policy rate; or you can develop some quantitative model to trade yield spreads, relative value etc. It's better to just simply search "keyword+wso" on Google and you'll find plenty good posts in most areas you'd want to know more about. Wiley Trading has a book called 'Interest Rate Markets: A Practical Guide' - reading this would give you an introductory understanding and the math is honestly not that deep for the majority of the products, the linear ones.
I'm also a student so most likely idk what I'm talking abt so take what I said with a pinch of salt.
Why do people invest in fixed income products? Can't you just ride a momentum trade and get a quick 10-15% ?
LOL if you think billion dollar firefighter pensions and endowment dollars are betting on riding the momentum you are trolling
You can get vanilla high yield exposure for >8% and you think some Huntville, AL pension fund with regular obligations is going to invest in high beta exposure momentum with high yearly drawn? A reminder that S&P yearly average drawdown is 13% and S&P had drawndowns of 27% in 2022, 32% in 2020, and 12% in 2018. I don't know the numbers on momentum but I wouldn't be surprised that it's nearly double that of the S&P.
Haha I think FI is more interesting than equities but idk the first thing about FI … high quality thought process here. Matter of fact, you’ll probably make a great fixed income guy!
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