Hiring Trends: Fixed Income

Hiring across all areas of Fixed Income Investing (including Product Management) picked up slightly in June but is still at around half 2007’s volumes for the first six months of this year.

The pace of hiring in June 2008 picked up pace slightly to just over half the volumes seen in June 2007 – a significant improvement when compared with May’s figures, which slumped to only 17% of May 2007’s levels. However, hiring in Fixed Income has decreased by 48% over the half year to 30th June, and is now by a long chalk the lowest level of hiring seen over the last four years (see page 2 of charts below).

As reported last month, market sentiment took a marked turn for the worse during March in response to the events such as the collapse of Bear Sterns, etc. At which point, many firms suddenly brought in hiring freezes, with the consequence that Searches in progress at that time either got binned or put on hold. Offers that would usually have gone out by the end of March simply didn’t materialise. Hiring figures for offers made/accepted in March start showing up in job moves one, two and three months later, as candidates serve out notice periods, and assume their new positions in April, May and June. So the sudden dramatic fall in hiring in April and May is simply reflecting the brakes applied back in March. For this reason, we expect that June hiring figures will also be significantly down on last year, as the effect of March’s loss of nerve continues to work its way through the system, and sure enough, that is what happened.

Although there are some signs that sentiment has improved – not least the slight pick up in hiring seen in June over May – the sudden downturn in the first hiring cycle will probably mean that hiring levels will be flat for the remainder of the year. This is because the year has, broadly speaking, three key hiring cycles. The first runs from January to March. The second runs from March to July, and the third from September to November. The second cycle is often fuelled by the need to fill gaps arising from the first cycle. Since the first cycle has been very subdued this year, there are very few gaps to fill, which will consequently depress the second cycle. And the third cycle is anyway always relatively low in volume given that most firms prefer not to have to buy out full-year bonus packages by making offers in December, preferring to wait for a couple of months until bonuses have been paid, letting them pick up candidates more cheaply in the New Year (and back to the first cycle, etc).

Having said that, our own experience is that hiring demand in the second cycle has picked up somewhat, so we would expect hiring figures for August, September and October to hold up reasonably well – albeit not at last year’s levels.

There has been a similar downwards trend across the board, with hiring in Equities Investing and Institutional Sales & Client Servicing both down between 31% and 19%, respectively though, unsurprisingly, Fixed Income has been the most affected of the product areas we cover.

Within the asset class, hiring demand remains weakest for Rates and Investment Grade Credit investors – though Financials analysts are enjoying an isolated hotspot of demand for obvious reasons. Other than that, demand has apparently continued to follow last year’s patterns with most interest in High Yield and Crossover (21%), Emerging Markets (19% of all hires) and continuing demand in Distressed Debt and Structured Credit (19%) – the so-called ‘tranche warfare’ starting to take effect.

Demand for Product Managers (that is, Client Servicers or Salespeople with a strong background in Fixed Income) also remains relatively buoyant, though with the general scarcity of skills, a number of firms are choosing to redeploy staff to this role internally rather than hire externally.

Our prognosis is that hiring in Fixed Income will continue to be depressed until the end of 2008. Now that market sentiment is improving, it is possible that there will be an increase in the number of searches initiated toward the fourth quarter 2008, but these hires will anyway not register in our statistics until 2009 as people assume positions after serving out gardening leave

Key hiring Houses in the year to date have included:

• PIMCO Europe, which has hired five people, including three ABS specialists, Nan Gonzales, Julia Kelting and Krishna Prasad; as well as David Fisher as a Product Manager and Richard Ford as a Credit Fund Manager.

• Threadneedle Investment, which has four people, including three Emerging Markets Fund Managers from Convivo Capital Management (Marcelo Saez, Stephen Johnston and Francois Mereau) and David Carr as a Product Manager.

• Both Gulf International and Legal & General have hired three people.

There have been relatively few senior hires in Fixed Income this year, though some notable movers have been:

In May:

• Rick Ford has moved to PIMCO as a Senior Credit Fund Manager within the European Credit business, based in London. He was formerly a senior Credit Fund Manager and Executive Director at Morgan Stanley Investment Management, where he has been since 2004.

In April:

• Brian Basset has joined Pearl Group as Head of Alternative Credit Business. Pearl Group is Pearl's Investment Management arm and Bassett formerly ran European leveraged finance at Deutsche Bank.

In March:

• Theo Zemek joins Axa Investment Managers as Global Head of Fixed Income and as a member of the group's Executive Committee. She was formerly Head of Fixed Income at New Star Asset Management.

• Ian Burnett has joined BlueBay Asset Management as Co-Head of the distressed debt team, alongside Gina Germano, Founder of the group. Ian was previously a Managing Director at Morgan Stanley, where he was responsible for European Distressed Debt and its special situations group.

• Patrick Edsparr joined Citadel as European Chief Executive & Global Head of Fixed Income. He will take up this new role in July, heading a London office that has grown to about 100 people since December 2001. He was formerly Global Head of Rates and Foreign Exchange, Fixed Income & Exotics & Hybrids at JP Morgan & Chase Co.

• James Taylor has joined Gulf International Bank as Head of Fixed Income. He was formerly on the Global Fixed Income team at Morley Fund Management.

In January:

• Peter Bentley joined Insight Investments as Head of UK Credit, from PIMCO – replacing Richard Dryer, who moved to Credit Suisse Asset Management as Head of UK Fixed Income business last July.

• Peter Stage joined F&C Asset Management as Head of Credit Research, in charge of both the investment grade and high-yield credit analysts. He was formerly at specialist Credit investor Gordian Knot.

• Hiring Trends: Fixed Income
  Click on the link for five charts showing hiring figures for Fixed Income Investors

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