Goldman Sachs’s fixed-income trading revenue jumped 83% in the first half of the year. In the second quarter, that unit notched its best haul in nine years while the equity arm had its best showing in 11 years.
Yet by early July, billionaire Steve Cohen’s Point72 Asset Management poached Goldman’s repo trading chief, Alex Blanchard, and the head of the bank’s U.S. government bond trading team, Andrew DiMaria.
Traders who jump to hedge funds can pocket compensation more proportional to their outsize profits. While many hedge funds have struggled to outperform the markets this year, some -- including Citadel, Balyasny Asset Management and Millennium Management -- are widely seen as having the strength to make targeted hires of rainmakers.
Bank traders who shined this year aren’t just helping their desks and company shareholders -- they will probably supplement pay for colleagues including investment bankers who saw their work arranging corporate takeovers interrupted as the deadly pandemic shut down commerce, according to consultants.
“Unless business results significantly improve during the balance of the year, 2020 incentive funding will be down, likely double digits for advisory,” Schindler estimated in a recent report.
Fixed-income traders probably should refrain from grousing about helping colleagues. Their own paychecks have been propped up at times with revenue revenue earned by investment bankers during the relatively low volatility of the past decade, according to Johnson. Now, they’re giving back.
“They’ve been paid better over the last half-dozen years than if they had been on their own,” he said.
--With assistance from Sridhar Natarajan.
This article was provided by Bloomberg News.