Best Areas to Be in Fixed Income Going Forward?

Curious to hear people's thoughts on what you think the growth areas will be in fixed income investing in the next couple of years and even further going forward. It seems like private debt has really boomed the past 10 or so years. Do you think this will continue or will another area maybe emerging markets for example become the best spot to be in?

Asking someone early in their career trying to determine the best place to be for long-term success.

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Comments (22)

Jan 23, 2021 - 12:55pm

Hi Distressed to Impress, just because I'm a bot doesn't mean I don't have feelings...I'm hoping these links are helpful. If not, feel free to throw monkey shit at me...

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Fingers crossed that one of those helps you.

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Jan 25, 2021 - 1:35pm

Starting out? Getting into a seat is the priority - if I were to pick, probably high yield or distressed would be of interest given where we are in the cycle (ha ha - assuming that even exists anymore). You'll get incredible amounts of experience or exposure in both cases. 

EM would be awesome - although I've noticed, purely anecdotally, that it can be challenging without knowledge of the country/language etc. 

Jan 25, 2021 - 6:02pm

I'm actually in a high yield seat right now, and definitely very interesting place to be. I would think it should be a good place to continue to be going forward, but wanted to hear other perspectives on where they think the most growth would be over the next few years and if they thought there were certain areas really worth exploring. I think distressed is interesting too but the firm I'm at seems to prefer a law background too which I don't have and am not planning on obtaining. Any thoughts if you think private debt will continue its torrid pace?

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Jun 8, 2021 - 10:26am

sorry never responded to this. But take a look at how important permanent (insurance, endowments, pensions) capital has become to PE firms. If I were a betting man, that'll probably be where most of their AUM growth will come from over the next decade. And they're huge investors on senior tranches in structured credit. The reinsurance/insurance CDO market still hasn't recovered as much as the ABS/MBS market pre-GFC, and is in catch up mode. CLOs are hot as well but have been hot for a while and are more mainstream now (if someone looks into their credit mutual fund in their RIA, there's probably some in there). This fuel is being ignited by the need for yield from perm capital investors.

Jan 29, 2021 - 4:05am

Emerging Market credit. If I could go back in time I would learn one of Spanish/Portuguese/Russian and position myself to be an EM credit analyst. Investors have too little allocation to EM debt in their portfolios, the markets are highly inefficient which allows for alpha opportunities, and EM economies are going to be the growth drivers over the next century. The last thing the world needs is another credit analyst opining on Dish/T-Mobile/JC Penny when there is so much untapped potential in LatAm/CEE/Asia.

Jan 29, 2021 - 10:51am

Ovechkin08

Emerging Market credit. If I could go back in time I would learn one of Spanish/Portuguese/Russian and position myself to be an EM credit analyst. Investors have too little allocation to EM debt in their portfolios, the markets are highly inefficient which allows for alpha opportunities, and EM economies are going to be the growth drivers over the next century. The last thing the world needs is another credit analyst opining on Dish/T-Mobile/JC Penny when there is so much untapped potential in LatAm/CEE/Asia.

Do you honestly believe that Spain/Portugal/Russia are going to be the growth drivers over the next century.

Look- EM is definitely a good spot, but that extreme volatility is why it has never attracted huge allocations.  Over the past century, even the smarterst investors have been getting burned by unstable currencies (i.e. Argentina)  or fraud (i.e. Brazil).

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Jan 29, 2021 - 11:56am
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