In a market devastated by losses from sub-prime mortgages and leveraged loans, several niches are seeing hiring activity, headhunters say. A few are even thriving.
Widely cited hotbeds are distressed debt investing and trading, and anything related to risk management. Both fields benefit directly from the credit crunch. Other fixed-income skills in demand include proprietary trading, flow trading for foreign exchange, interest rates and commodities, algorithmic trading, and fundamental analysis of financial institutions.
"What would be the golden job to have in 2008, it's risk - as long as you weren't at one of the wrong places in 2007," notes Wall Street compensation consultant Alan Johnson, managing director of Johnson Associates. He predicts average compensation for sell-side risk professionals in 2008 will hold steady or climb versus 2007, while banks' overall bonus pools shrink 30 percent or more.
Needed Skills for Risk Management
Employers are seeking a number of distinct skill sets in fixed-income risk management. With markets in turmoil and defaults expected to soar, institutions are devoting particular attention to managing counterparty risk, says Jay Gaines, chief executive of Jay Gaines & Co. These roles require both fundamental credit expertise and the business judgment to properly price and balance risk against the prospective return from a credit decision. While firms can shy away from principal trading and taking market risk, Gaines points out every financial institution must manage counterparty risk when trading with or lending to other institutions.
Expertise in quantitative models that help institutions track fixed-income market risk is another draw. "There's a growing need for better quant models and more transparency and people who can identify risk quickly," says Jim Geiger of Analytic Recruiting. He's seeing investment firms bring in people with experience implementing specialized systems for derivatives pricing, valuation and risk management. A typical recruit would be a quant Ph.D. who had implemented an outside software product at another investment firm. Demand for high-level quants is also coming from dozens of financial technology vendors that supply software for risk management.