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.
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 career in fixed income 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 surrounding to young aspirants by introducing to them the world of varied fixed income products and their complex mechanism. Most importantly 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 analysis to compute the risk involved in debt securities. These projections originating from a number of evaluations to gauge the market situation help keep intact the flow of pay-outs to the investors. They primarily guide investors in understanding credit and other market risks.
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.
- Acquiring appropriate data from various sources for conducting suitable investigation in order to make well-informed decisions.
- To maintain transparency and consistency and to ensure the efficiency of the data analytics and understand the risk involved in it.
- Inspecting the current procedures and chart 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 decent analysis of the risk exposures.
- Offering solutions and proposing new ways to shrink the losses and generate better returns.
- Making recommendations 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 at about 11% in the period between 2016 to 2026, and there will be continuous advancement as the economic activity further picks up. The demand for fixed income analyst (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.
- There are around 296,100 financial analyst jobs in the market according to the BLS statistics, 11% growth rate means an increase of 32,200 positions, faster than the average for all occupations
- In the United States, the following states have the highest number of financial analysts- New York, California, Texas, Illinois, and Florida. However, the profession is mostly concentrated in Delaware, 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 OTC debt market
- All the other players in the market trading in fixed income securities like pension plans, insurance plans, Non-banking firms, individual investors.
- 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 to play in securing a good salary.
- 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 come into existence more and more financial analysts will be needed to estimate the emerging investment opportunities.
- Additionally, as the economic activity takes further 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
- The proven academic record of success, preferably with a focus in finance, statistics, or mathematics.
- Bachelor’s degree in finance, economics, mathematics or relevant field
- Desire to pursue CFA/FRM certification
- You can also take this Fixed Income Course
- 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.
- Analysts by virtue of their role 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 profit-building of the firm, which makes 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 a track of industry needs and make sure they are ready to become an integral part of the decision making and open to new strategic initiatives in order to curtail losses.
Career #2 – Fixed Income Trader
- A fixed-income trader is an investment professional who is involved in the trading of fixed income securities. They research varying market trends and assess current conditions to make portfolio decision that has the maximum profit potential. They buy and sell securities for their clients and institutions.
- Their primary task is to monitor and accumulate data on specific markets and accordingly build competent trading strategies that are in line 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 client’s and institutions’ investment needs, learn their financial goals and help them meet those goals by precisely recognizing and buying the most suitable fixed income instrument for them.
- To ensure and maintain timely execution of trades and they all are in line with regulatory requirements.
- Follow up with the backend team to make sure the orders the trade has been processed and we’ll confirm.
- Maintain buy and sell records for every trade in the internal system and make sure 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.
- 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 with a focus on business finance, mathematics, statistics or accounting is a minimum requirement. Whereas, an advanced degree like masters or MBA in financial analysis, quantitative and analytics is highly desirable. Moreover, basic qualities like quick thinking, interpersonal skills, effective communication are expected from the incumbent.
- Other certifications like FIC (fixed income certificate), 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.
- In the United States, before the incumbent can start trading 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, as such the competition is very intense. As per the Bureau of Labor Statistics in the United States, since Lehmann crisis, the fixed income industry has resumed growth and expected to grow at 14% between 2010 and 2020.
- A fixed income traders 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.
- 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
Fixed Income strategist is a part of the quantitative analysis and research career team. The purpose of this role is to focus on the development of analytical tools to determine high-value trades in order to assist managers and traders in managing bond portfolios effectively.
- Create and execute a 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 up with other research and investment teams to resolve analytics and data concerns.
- Researching emerging markets and liaise with economists and other senior officers to develop strategies that are in line with the overall growth objectives of the firm.
- Assist internal traders and sales teams and liaising with the institutional clients to work on their customized trading needs.
- Publishing regularly the research reports with trade endorsements in fixed income and other OTC products.
Qualification and Skills Required
- The incumbent should at least possess a bachelor’s degree with a focus on 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.
- The remuneration structure for fixed-income strategist in the United States range between $240,000 to $300,000.
- This profile offers some real insight into the quantitative world. Apart from being a very challenging job, it is also very critical, in the sense, it influences investment decisions and helps management achieve their investment objectives. This is one of the most booming professions in the industry and equally rewarding in terms of money and status.
Career into fixed income requires lots of preparation and hard work. A fixed income job role has the ability to not only provide financial rewards but also 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 decision which makes it highly critical and profit inclined.
Therefore youngsters aspiring to become FI professionals must make sure their knowledge and research skills in FI are second to none.
This has been a guide to Career in Fixed Income. Here we provide the list of top 3 Fixed Income job roles, description & career paths including Fixed Income Analyst, Fixed Income Traders, etc. You may also have a look at these articles below –