Careers in Fixed Income

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List of Top 3 Fixed Income Careers

Below mentioned are some of the Fixed Income job roles that a person can reach in his career.

List of Top 3 Fixed Income Careers

Overview of Fixed Income Careers

A fixed-income job is one of the deepest and largest markets in the financial space, which helps companies and sovereigns to grow by helping them raise debt. A fixed-income career can take one to the most profound realms of the quantitative and research world, giving them true insights into the heart of the world economy. A fixed income role offers excellent exposure and vibrant surroundings to young aspirants by introducing to them the world of various fixed income products and their complex mechanisms. Most importantly, a fixed income job is one of the most reliable and secure careers in the financial world as it entails less risk and offers a diverse range of investment options for all.

Career #1 - Fixed Income Analyst

Fixed-income analysts undertake a wide range of sophisticated analyses to compute the risk involved in debt securities. These projections originating from several evaluations to gauge the market situation help keep the flow of pay-outs to the investors intact. They primarily guide investors in understanding credit and other market risks.

Job Responsibilities

Some of the most important responsibilities performed by them are;

Working with the other fixed-income teams to develop a unanimously integrated fixed-income risk report, which reflects the aggregate risk of the entire debt structure of the organization.
We are acquiring appropriate data from various sources for conducting a proper investigation to make well-informed decisions.
To maintain transparency and consistency, ensure the data analytics's efficiency, and understand the risk involved in it.
Inspecting the current procedures and charting new ways to enhance the usage of derived analytics.
To work in close coordination with the other team members and make smart use of available resources and tools, which will help in the descent analysis of the risk exposures.
Offering solutions and proposing new ways to shrink the losses and generate better returns.
They recommend to the organization whether to buy, sell, or hold certain security.
Maintaining products efficiently, analyzing fixed income investment strategies.
Performing stress tests and simulations on the current portfolios.
Studying financial statements and unraveling new investment strategies whenever needed.

Job Stats and Prospects

According to BLS statistics, the profession is poised to grow by about 11% in the period between 2016 to 2026, and there will be continuous advancement as economic activity further picks up. The demand for fixed income analysts (financial analysts) is also expected to amplify owing to the introduction of data analytics and other tech advancements, which has given the junior level employees better insight into data management and conduct a meaningful analysis with minimum errors, thereby, giving companies new confidence to expand and operate with a larger profit base.
According to the BLS statistics, there are around 296,100 financial analyst jobs; an 11% growth rate means an increase of 32,200 positions, faster than the average for all occupations.
The following states have the highest number of financial analysts in the United States- New York, California, Texas, Illinois, and Florida. However, the profession is mostly concentrated in Delaware and New York.

Top Employers (same for below two professions)

Big four firms, i.e., Deloitte, PWC, KPMG, EY.
All the investment banks and rating agencies.
Sell-side research firms.
Boutique investment banks and investment managers interested in the OTC debt market.
All the other players in the market trade in fixed income securities like pension plans, insurance plans, Non-banking firms, and individual investors.

Remuneration

The compensation offered for fixed income analysts normally ranges between $51,000 to $55,000 at a beginner level in the United States. Mid/senior-level professionals can secure anywhere between $100,000 to $120,000. Other factors, like skill set and knowledge with the level of responsibilities, also have a major role in securing a good salary.

Demand

In this era of cut-throat competition where businesses are strategizing to outgrow each other, credible and well-qualified individuals are central to the greater wealth-making objectives of the firms. As new businesses exist, more financial analysts will be needed to estimate emerging investment opportunities.
Additionally, as the economic activity takes a different pace in the emerging markets, new opportunities to invest and the availability of complex products will lead to increased demand for such an analyst. Also, with the advent of 'big data' and tech improvements in the financial world, companies will require more and more well-qualified individuals to deliver better.

Educational Requirement and Essential Skills for the Job

A proven academic record of success, preferably with a focus on finance, statistics, or mathematics.
Bachelor’s degree in finance, economics, mathematics, or relevant field.
Desire to pursue CFA/FRM certification.
Impetuous written and verbal communication skills.
Demonstrated Problem solving and analytical skills, attention to detail, and a desire to succeed are paramount.

Additionally, the incumbent is expected to possess in-depth knowledge of fixed income securities and must be ready to work under tremendous pressure with a curiosity to be a self-starter. They should possess management skills and demonstrate virtuous organizational abilities.

Positives

Analysts, in their roles, make some high-level contributions to the overall decision-making of the firm. Stress testing and risk curtailing are some of the major factors in the firm's profit-building, making the job more critical and precarious. The level of complexities and challenges faced are more than any other product class, purely because of the OTC nature of the product and the fact that they are customized.
Additionally, a career as an analyst is very lucrative. Young aspirants must keep track of industry needs and ensure they are ready to become an integral part of the decision-making and open to new strategic initiatives to curtail losses.

Career #2 - Fixed Income Trader

Responsibilities

A fixed-income trader is an investment professional who is involved in the trading of fixed-income securities. They buy and sell securities for their clients and institutions. They research varying market trends and assess current conditions to make portfolio decisions with the maximum profit potential.
Their primary task is to monitor and accumulate data on specific markets and build clever trading strategies that align with the overall market forecast and growth estimate. Their research is highly critical as it influences major investment decisions.

Important Roles and Expectations from a Fixed Income Trader

To perform market research and analyze economic conditions for debt securities.
To continuously communicate and understand clients' and institutions' investment needs, learn their financial goals, and help them meet them by precisely recognizing and buying the most suitable fixed-income instrument.
They are all in line with regulatory requirements to ensure and maintain the timely execution of trades.
Follow up with the backend team to ensure the trade orders have been processed, and we’ll confirm.
Maintain buy and sell records for every trade in the internal system and ensure all the documents and accounts are up to date. The same is the expectation for inventory records.
Expected to build up a rapport with clients and guide them on the transactions they undertake with the risk they stand to face.
I am using all the records to determine leverage opportunities and work on building fresh ideas to explore new investment opportunities and markets.

Qualifications and Skill Set Required to Become a Fixed Income Trader

A graduate degree focusing on business finance, mathematics, statistics, or accounting is a minimum requirement. An advanced degree like a master's or MBA in financial analysis, quantitative, and analytics is highly desirable. Moreover, basic qualities like quick thinking, interpersonal skills, and effective communication are expected from the incumbent.
Other certifications like FIC (fixed income certificate) and CFITS ( Fixed income trading and sales) are expected to be pursued as soon as possible to further the knowledge and skills required to become a smart and efficient fixed income trader.
Before the incumbent can start trading in the United States, he is expected to acquire a license from the National Association of Securities Dealers, bypassing a few relevant exams.

Some Facts and Figures

Trading in fixed income is a very lucrative profession. The intensity of the work can be very electrifying. The fact also is the level of tenacity required for the job is very high, and the long working hours with challenging situations are not for everyone.
However, the customary high compensation makes it a highly desirable profession. Often the number of applicants astonishingly exceeds the number of positions; the competition is very intense. As per the Bureau of Labor Statistics in the United States, since the Lehmann crisis, the fixed income industry has resumed growth and is expected to grow at 14% between 2010 and 2020.

Compensation

A fixed-income trader's salary can vary extensively, looking at the geographic location and the hiring firm; some researchers estimate the average salary at $85,000 p.a; with a low salary of $65,000 and a high salary of $200,000. Many firms offer incentives.

Setbacks

For youngsters wanting to make a career in fixed income trading, it’s important to note that the industry dynamics are changing, and banks are inclined to take less risk. From a regulatory perspective, the market demanded reforms as the old model was unsustainable.
As the market has undergone modification and uncertainties, it is natural for industry to compress, at least temporarily. This means fewer jobs and a reduction in product research and innovation coupled with periods of illiquidity.

Career #3 - Fixed Income Strategist

A Fixed Income strategist is a part of the quantitative analysis and research career team. This role aims to focus on developing analytical tools to determine high-value trades to assist managers and traders in managing bond portfolios effectively.

Responsibilities

Create and execute global analytics and data platform for FI research and portfolio management teams.
Build FI strategies for clients and customers, and present it eloquently in a manner that is lucid and graspable for novice audiences.
Interpret economic views of the firm and construct minimum variance strategies that align with the overall outlook of the firm.
Partner with other research and investment teams to resolve analytics and data concerns.
Research emerging markets and liaise with economists and other senior officers to develop strategies that align with the firm's overall growth objectives.
Assist internal traders and sales teams and liaise with institutional clients to work on their customized trading needs.
We regularly publish research reports with trade endorsements in fixed income and other OTC products.

Qualification and Skills Required

The incumbent should possess a bachelor's degree in statistics, economics, and finance. A Master's degree in quantitative subjects is highly desirable.
Demonstrate advanced knowledge of all fixed income securities, markets, trading strategies, macroeconomics, and the ability to sell products.
Good conceptual understanding of debt market regulatory requirements.
Ability to build good relationships and be an influencer.
Good communication skills and excellent presentation acumen.
Should be a CFA charter holder.

Compensation

The remuneration structure for fixed-income strategists in the United States range from $240,000 to $300,000.

Positives

This profile offers some real insight into the quantitative world. Apart from being a very challenging job, it is also very critical; in a sense, it influences investment decisions and helps management achieve their investment objectives. This is one of the most successful professions in the industry and equally rewarding in terms of money and status.

Conclusion

A career in fixed income requires lots of preparation and hard work. A fixed-income job role can provide financial rewards and natural contentment that comes from being an integral part of the business model. A fixed-income job role also has a major influence on policy and investment decisions, which makes it highly critical and profit-inclined.

Therefore youngsters aspiring to become FI professionals must ensure their knowledge and research skills in FI are second to none.

Careers in Fixed Income