Winning in the bond market used to come down to math skills, gut instinct and the patience to wade through a hefty prospectus. That was before the quants came.
These days the ability to code is one of the hottest skills out there. The multi-trillion dollar market in company debt is getting wired up by systematic players, and firms are having to pay up for the best talent.
Hedge funds are poaching from rivals, sweetening compensation packages and committing more resources, according to recruiters. Credit-quant clients at London firm Selby Jennings are offering annual compensation of up to $400,000 to a Ph.D. graduate with five years’ experience as a desk strategist.
For seasoned quant traders, opportunities abound. Take ex-Citadel head of quantitative research for global credit Frederic Boyer. He was tapped by Chicago-based Jump Trading earlier this year as the high-frequency pioneer steps up a push into the bond market.
Hugh Willis, co-founder of BlueBay Asset Management, is readying a systematic debt investment firm in London. More than 70% of its 55 staff members are able to code. Man Numeric, a quant arm of the $113 billion hedge fund, started a corporate debt group last year.
After years of tiptoeing around systematic styles in debt markets, investors are starting to believe in the promise -- ushering in a new world of advanced statistics and robot-learning. About 70% of institutional and 78% of wholesale investors reckon the strategy of dissecting securities by their factors, like value and momentum, are applicable to fixed income, according to a study by Invesco Ltd.
“There’s been an intensification of interest and willingness to put money on the table in the past 18 months,” said Luke Williams, partner at London-based recruitment firm Lascaux Partners Ltd. “Credit has emerged as a stand-alone business in the systematic investing world.”
It’s been a long time coming. While quants for decades have mined stocks for riches, fixed income remains a nascent field. The academic research is slim compared with the volumes devoted to investing in shares. And with equity factors misfiring of late, it’s become the next frontier for data-intensive active strategies.
This new era demands new skills, and fresh entrants are bringing their scientific smarts to an industry where traders still regularly conduct business with peers on a first-name basis.
Andrew Das Sarma is cut from that cloth. Jump recently hired Das Sarma from Citadel where he was a fund manager focused on convertible arbitrage and systematic credit strategies, according to a person familiar with the matter who asked not to be named because the information isn’t public. He holds a master’s degree in Applied Mathematics and a bachelor’s in Physics from Harvard University, according to his LinkedIn page.