Best Fixed Income Desks for Rotation

Based on the most helpful WSO content, when considering rotations for a full-time position, especially with an eye towards moving to a Macro/Fixed Income Relative Value Hedge Fund (RV HF) later on, it's important to consider which desks will provide the most relevant experience and knowledge. Here's a breakdown of the three options you've mentioned:

1. Cash Bonds:

   • Learning Opportunities: This desk will give you a solid understanding of the bond market, including pricing, yield curves, and credit risk. You'll learn about different issuers, from sovereigns to corporates, and how economic indicators affect bond prices.
   • Applicability: The experience here is very relevant to a Macro/Fixed Income RV HF, as understanding the fundamentals of bond markets is crucial for macro trading strategies.

2. Repo:

   • Learning Opportunities: The repo desk will offer insights into short-term funding markets and the mechanics of repurchase agreements. It's a good place to understand the liquidity aspect of the financial markets and collateral management.
   • Applicability: While not directly related to trading, the knowledge gained here can be valuable for risk management and understanding the funding side of trades, which is important for a macro hedge fund.

3. Funding/Treasury (Balance Sheet):

   • Learning Opportunities: Working on this desk, you'll learn about the bank's liquidity, funding strategies, and how to manage the balance sheet efficiently. This includes understanding the regulatory requirements and the impact of different funding costs.
   • Applicability: This role is more internal and less market-facing. However, the experience can be beneficial for a hedge fund role, as it provides a deep understanding of how money moves and is managed within a financial institution.

In terms of ranking for best opportunities to learn and applicability for a Macro/Fixed Income RV HF, it would generally be:

1. Cash Bonds
2. Repo
3. Funding/Treasury (Balance Sheet)

Cash Bonds are most directly related to the markets and will likely provide the most transferable skills for a hedge fund focused on macro and fixed income strategies. Repo could also be valuable, especially for understanding the plumbing of the financial system, which is essential for macro trading. Funding/Treasury is less market-facing but offers a unique perspective on how large financial institutions manage their liquidity and regulatory requirements.

Remember, the best choice also depends on your personal interests and where you see yourself fitting best. Each desk has its own set of skills and knowledge that can be valuable in the hedge fund space.

Sources: What fx/rates/fixed income desk is best for macro/rates hedge funds?, Q&A: Non-Target School to Portfolio Manager at a Top Hedge Fund – 6 Years Out of Undergrad, Macro vs Rates RV, Big3 Credit Rating grad > IB after 1 year, Q&A Macro RV Analyst/Trader