Research vs Trading for Credit HF

I have the opportunity to move into credit research or trading on one of my company's fixed income mutual funds.

Ultimately I'd like to move over to the credit HF space. Curious on people's thoughts on whether research or trading is a better path. My understanding from talking to people at my company is that research really knows the companies and issues trade recommendations but the traders get the final say and are the decision makers.

Comments (4)

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Dec 2, 2021 - 11:49pm

Research is definitely a good way in since you're vetting a PM's ideas for viability and tacking on additional details you uncover. Plus good research doesn't just flesh out what might be a good position; more importantly it can keep the fund from entering a bad position in the first place. The traders I've known at HFs (came close to being one myself a decade ago, so definitely asked the same questions) are much less discretionary and instead are mostly execution traders who use what discretion they do have for leaning on relationships across different desks for better entry/exits while staying within risk paramaters. Sprinkling on some gains with bagging rebates while they're at it. Not saying there aren't traders out there with a lot of discretion to work with.

Dec 3, 2021 - 11:51am

Your second comment is more in line with my own experience which is all I can speak to. Makes a lot of sense that the PMs you work with are also trading their own book, so I definitely wouldn't call that out of the norm. Any possibility you can chat with one or some of them about this? Especially if your ultimate goal is to be a PM too (I know it was my goal back then!)

Edit: You made me do some reflection of my own and I realized that the PM's I've worked with before (ETF and MF) definitely each fit a certain path to PM. The ones who came from research lead the more specific funds like "Uranium miners" or "Small-cap software less than 3yrs public". AKA the spaces they would probably have been researching and known intricately before running a book. Then the traders who scaled up to PM were all running the more generic "Target retirement 2030/35/40" or index style funds like "Russell 3000 ex-financials" types of books. Where they rely on their research team to set allocation and they just make sure the block trades hit and the holdings stay in the defined weighting.

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Dec 11, 2021 - 12:32pm

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