Is there typically a difference in compensation between equity research and credit research? And also do people in HY make more than IG? It seems like HY is more attractive than IG for exit ops, if that’s the case, why would people prefer IG?
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[email protected], have you checked out these or run a search:
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Fingers crossed that one of those helps you.
Also interested if anyone knows, plus the exit ops from credit research vs equity research
Bump
Speaking from buyside credit, you will probably make slightly less in credit on average, but the calculus is different. At the end of the day there's more return potential, risk-taking, and alpha generation potential in equities, so the compensation ceiling will naturally be higher. That being said, it tends to be a little more volatile, so the difference isn't as glaring when smoothed out and you have less of a chance of "blowing up" in credit. As it relates to IG vs. HY, you can definitely make more in HY, for similar reasons why you'd expect to make more in equities. That being said, a lot of nuance here in terms of how firms structure comp and what products/asset classes are performing well and are most profitable for the firm. If your firm runs a ton of IG money and consistently performs well, especially relative to other asset classes you can get paid great. That being said I have only worked in two places so I am not as in tune here.
As for sell-side (what you are likely referring to), I'd bet there is a similar end result for different reasons. At the end of the day, ER guys have a larger audience than the credit guys and likely have more flow revenue associated with their work output. Even as a credit guy I spend as much time if not more reading/working with ER guys than credit analysts that cover my space.
I would add that at the bank i used to work for, credit had a much wider bonus band than equities as they were closer to "desk" analysts, who also did publishing, so the bonus pool was directly out of your traders PNL. I dont think most banks were set up like that, and there would usually be a chinese wall separating publishing research and traders, but at my specific bank there wasnt. Maybe is different now
It's different now. More banks are moving to the "desk model" you mentioned on the fixed income side. At least I know Barclays runs that way.
Barclays still runs a publishing side, but their analysts sit with the traders aswell- kind of a unique set up. I know jpm/bofa have their publishing analysts walled off of the traders.
I think generally speaking, desk analysts are more trading-oriented (working w/ traders based on positioning and desk views) while publishing analysts are generally thinking on ~12 month time horizons.
Would also say that my impression is that on the buy-side, equities > HY > IG when it comes to comp, but that comes with more career risk as well (hard to get fired covering IG credit)
Yes, but I will probably voluntarily leave if I cover IG credit.
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