To anyone with substantial experience in the industry,I have started looking for a job a few weeks ago, but in spite of the various groups I had an interview with, I'm still undecided as to which asset class or derivative type I should go for. Hence the following enquiry: Which of the following asset classes/derivatives offers the best career prospect : equity, FI , Credit, commodity, FX, IRD???? I do not necessary mean financial prospects, but also intellectual/challenging (if these 2 do not go hand in hand). Above all, which one, if possible, will be an active area in 10 years time? Any web/book reference on a clear classification of the above most welcome!CheersDunkan

I'm not sure anyone can answer that question as well as you deserve.Hwo do you define stimulating ? More advanced math ? Broadening your understanding of new things ?It's tempting to see any asset class as a bit mean reverting. From starting as a newbie to being properly dug in, takes a few years, so you may get drawn in like many to a succesful area who are of course doing the most hiring, and then when it mean reverts find yourself competing with many similar people.On the other hand some things just die. People do make money from straight equities, but that's not a big thing now, and hard to see it ever being big again.Credit has been doing well, which of course means that a lot of the easy money has already been made. Requires knowledge of things other than the models, and this can involve stuff like tax and basic law.Commodities can be very challenging, but it depends upon what sort of thing you like. They require a lot more understanding of the "real world", where the time for things to get places is longer, and where the equivalanece of different lumps of the same thing is not always 100%. Still needs good maths, but other stuff as well. Some like it, others don't. Energy has been quite interesting lately. Hard to guess about FX. A couple of years ago the emergence of the Euro replacing so many currencies caused the number of traders to drop quite hard, but it's doing well now that "supply" is more balanced.IRD involves a lot of hard maths, and it's hard to see a crunch any time soon, but that's very hard to call over your timescale of a decade.

Thanks for your very quick answer.I'll stop beating around the bush: How would you rate a front office quant position in FX options (vanilla & exotic) + exposure to IRD +FX/IRD Hybridswith apparently a leader in emerging market currencies, which has a good presence on the global FX market too?By challenging I mean hard maths.Dunkan

FX derivs: I would not encourage since the business has had its margins to tightened that even derivatives contracts are being now sold via electronic platforms. IRD or Equity derivs: both Business make money and are quite intellectually chalenging. Both involve a hard maths.CREDIT derivs: everything has yet to be discovered (Hedging + decent models). The more chalenging subject at the moment from my modest point of view.The future is : Hybrids accross the previous asset classes.

Equity derivs needs a lot of maths??

I would disagree with DCFC's take on straight equities. In the UK alone equity holdings by pension funds and insurance companies stand at something like 1 trillion, if you can get a management fee for looking after their assets you can make a lot of money.In general my bet would be a move away from risk management/minimisation towards risk harvesting - so I would see the IB's derivatives business becoming increasingly commoditised and a cycle back to more conventional asset classes. So I would say prop trading and long term investment as opposed to spread scalping.Specifically I doubt emerging market FX is V. quant, and its a small market so easy to claim to be a leader.

I would disagree with DCFC's take on straight equities. In the UK alone equity holdings by pension funds and insurance companies stand at something like 1 trillion, Agreed, that the sclae of money is huge. My function was more what you can make personally, which is a function of the profitability of this sort of activity.I would also say that these entities are moving away from their traditional base of instruments, albeit slowly.if you can get a management fee for looking after their assets you can make a lot of money.The total fees for the industry are not large since managing straight equities is viciously competitive. Franky having met a number of equity fund managers they all seem grotequely overpaid for their abysmal level of skill and poor performance. In general my bet would be a move away from risk management/minimisation towards risk harvesting - so I would see the IB's derivatives business becoming increasingly commoditised If by "risk harvesting" you mean moving risk around for profit, then I agree 100%.One is always walking up the down escalator. Really profitable and hard to master things become commonplace and commoditised. and a cycle back to more conventional asset classes.To an extent this is always true, but on a small scale. When an area is "hot" lots of smart people start mining it, capital and risk capacity is made available, and thus opportunities in older less exciting areas are missed.However, that back leakage maybe enough to keep a few people very profitably employed, it is rarely worth planning on.So I would say prop trading and long term investment that's so contrary to my view, that I'd love to hear more of your reasoning.as opposed to spread scalpingAgreed again.

QuoteOriginally posted by: DCFCSo I would say prop trading and long term investment that's so contrary to my view, that I'd love to hear more of your reasoning.I dont know if theres really any reason too it other than contrarian thinking.Banks have moved out of taking on long term risk, or increasing liquidity through prop trading (helping capital get from one place to the other.Both add value to the economy so they should be rewarded. Prop trading (currently booming via trend following hedge funds) is currently booming but is so contrary to financial theory that it must be right.Long term investing has been so belittled in recent years that again there must be something to it.More anti reason than anything.I would call moving around risk for profit, spread scalping. Risk harvesting is taking on, and benefiting from exposure to real risk.

A quote from Liar's Poker served me well:"You spend a lot of time asking yourself questions: Are munis right for me? Are govys right for me? Are corporates right for me? You spend a lot of time thinking about that. And you should. But think about this: It might be more important to choose a jungle guide than to choose your product. Thank you."

how much of the credit deriv business is vanilla driven.. ? I get the impression that most of the volume is vanilla CDS or baskets.. is there much vol trading in the credit side? Equity derivs are getting more and more advanced, and it seems that volumes are picking up. Most banks now have a dedicated varswap traders.. Do you see credit derivs catching up with eqds anytime soon? I have not had much exposure to the macro side of the business, FI, FX and IRD derivatives.. but how different is it to trading vol on equity? Seems like the skillset of an equity deriv trader are easily ported to these other asset classes..For the younger members on the forum.. how easy would it be to move around asset classes, shifting to more 'macro' products..?