I was recently talking to a hedge fund manager about career paths and the qualities he looks for in hiring analysts for his fund. Before the conversation, I had always discounted fixed income research as a career stepping stone. However he made an interesting comment about fixed income research vis-a-vis equity research. In his opinion, Equity Research Analysts, while they are very knowledgeable about an industry or a company, are largely concerned with earnings growth, price targets, and the next product. On the other hand, a fixed income research analyst largely focuses on weather the investor will get his money back. As a result, the fixed income analyst will do a much more thorough analysis of a company's balance sheet, income statement, and other SEC filings compared to an equity research analyst. While the fixed income analyst is largely concerned with preservation of capital, the equity research analyst is much more focused on EPS growth and catalysts for stock price appreciation.
As a result, this hedge fund manager views a prospective hire with experience in fixed income research as a major plus. Indeed, he requires all his analysts to do a rotation on the fixed income research desk in order to gain that experience. The focus on a company's credit worthiness and financial strength acquired through fixed income research seems to be a valuable one.
On this site, for better or for worse, there seems to be a predetermined path that is recommended for all of the aspiring John Paulsons and David Teppers. While this is just one person's view, I wonder what you all think about it?