Hello everyone,
I want to work at a credit HF later. I am wondering if it is doable after doing a stint as a credit trader (HY/distressed). If the fundamental skillset is considered lacking, is a 6 month internship in restructuring as part of my gap year enough to justify my level later for interviews ?
I know the classic path for credit HF is to do banking but I want to start in trading.
Thank you for your help !
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Based on insights from Wall Street Oasis, transitioning to a credit hedge fund (HF) from a credit trading background, especially in high-yield (HY) or distressed securities, is indeed a viable path. Your experience as a credit trader can provide you with a solid foundation in market dynamics, risk assessment, and the ability to make quick, informed decisions. These are valuable skills in the credit HF space, where understanding market movements and the ability to act swiftly on investment opportunities can differentiate successful funds.
However, it's important to recognize that credit HFs also highly value deep fundamental analysis skills, which are typically honed in investment banking or restructuring roles. Your proposed 6-month internship in restructuring could significantly bolster your profile in this regard. It would provide you with exposure to the analytical rigor and financial modeling expertise that are crucial in evaluating distressed investments and restructuring scenarios, areas of keen interest to many credit HFs.
To further enhance your candidacy for a credit HF role:
Leverage Your Trading Experience: Highlight how your trading experience has given you a keen understanding of credit markets and the ability to make rapid, data-driven investment decisions.
Maximize Your Internship: During your restructuring internship, focus on gaining as much hands-on experience as possible with financial modeling, valuation, and the restructuring process. This will not only improve your skill set but also provide tangible examples of your capabilities during interviews.
Self-Study and Certifications: Consider supplementing your experience with self-study in areas like financial modeling and valuation. Certifications such as the CFA can also add credibility to your fundamental analysis skills.
Network: Utilize your time in both roles to build a robust network in the credit HF space. Networking can provide insights into what specific funds are looking for in candidates and may open up direct opportunities.
Pitch Ideas: Be prepared to discuss specific credit investment ideas in interviews. This demonstrates not only your analytical skills but also your proactive approach to identifying opportunities in the credit market.
Remember, while there is a classic path to credit HFs through banking, the industry values diverse experiences that contribute to a fund's ability to spot and capitalize on opportunities. Your unique combination of trading and restructuring experience, especially if well-articulated and supplemented with self-driven learning, can make you a compelling candidate for credit HF roles.
Sources: Ask a credit H/F analyst anything, just trying to help, Navigating Distressed HF space and recruitment, Transitioning from High-Yield/Performing Credit to Distressed HF, Q&A: Restructuring Analyst at Top BB, https://www.wallstreetoasis.com/forums/qa-hf-out-of-undergrad?customgpt=1
Sell-side trading -> HF is an orthodox route, your head is in the right space. I will say HY seats at the BB’s you need to make the jump are few and far between(JPM/MS/BAML). It’s not going to be 1-2 years as an analyst and then jump type of situation either. You’ll likely need 5-7 years in, and VP level book experience before most funds will care for you. Most funds outside of private credit/systematic/pods recruit on a different spectrum. You usually partner on sitches with these guys trading book, and over time if you’re good you kind of just get offered the job. In short it’s a long career path, you’ll need a PnL track record, and you’ll gradually make your way in. Just my experience having seen it on the sell-side
Thank you very much for your insight. I enjoy doing fundamental analysis and at the same time want to do trading. From what I have seen so far, the only desks that offer that are HY/Distressed credit and it's more for analysts at the desk and not traders. If I opt for a credit trader role, will I be pigeonholed and would only be able to transition to HFs as an ExecTrader ? I know generally people start as desk analyst and try to exit fast but I want to keep my options viables if ever I felt trading is the best fit for me. At the end of the day, if it's not possible, i wouldn't mind doing a more macro focused product but it would be a shame to stop doing something I enjoy and am really good at. Thank you for your help. It's hard to find answers on the web to such questions !! Cheers
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