The bond market is way bigger than the equity market. It’s been ripe for disruption.
“It’s less straightforward than equity research,” says Houweling. “It requires much more attention to detail.”
For instance, credit markets are plagued by byzantine corporate structures and multiple alphanumeric codes for a single security. Unlike stocks, bonds mature. Plus there’s a dearth of data relative to equities and more stringent liquidity screens.
The computing chops required are far more than just knowing how to make a pivot table in Excel, and the skills in demand go way beyond finance. “One strategist I recently placed had competing offers from Netflix, Google, Facebook and the hedge fund I eventually placed him with,” said Deepali Vyas, global co-head of FinTech at recruitment firm Korn Ferry in New York.
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.