Quants in buy-side and sell-side

[echostate]

Consider the following types of quants, if quant not only refers to type 3):

1) Quants in hedge funds, doing statistical arbitrage/high frequency trading
2) Quants in hedge funds, doing quantitative asset/portfolio management

3) Quants in front desks of IB, doing derivative pricing
4) Quants in middle office of IB, doing risk management/model validation

For the income (base salary + bonus) of the same level (e.g., entry-level)
I know 3) > 4).

But what is the general order for all these 4 types of quants (for entry-level, 1-3
year experience level, 3+ year experience, etc.)?

 

[Andy Nguyen]

I think only people with experience like Dominic can comment on this as he interfaces with plenty of people in your question.

 

[echostate]

I think only people with experience like Dominic can comment on this as he interfaces with plenty of people in your question.

Thanks.

Yes, I realized that such a question is hard to answer.

Actually, what I really care about is not the exact number of salary, but the career path for an engineering/science student on these different tracks. Well, this is also a hard question ...

 

[Bridgett]

Thanks.

Yes, I realized that such a question is hard to answer.

Actually, what I really care about is not the exact number of salary, but the career path for an engineering/science student on these different tracks. Well, this is also a hard question ...

What working environment would you enjoy being in?
What do you love doing for the rest of your career life?

Not sure which question would be easier to answer, but career satisfaction comes much closer when one knows him- or herself.

What are your goals?

 

[jumpbean]

I had some experience with sitting at a prop desk doing algo/arb trading.
To be honest, I am not so optimistic in this area, as the arbitrage opportunity is disappearing.

Derivative pricing can be a routine job, once you finish up your coding. Everyday you work under high stress.

Buyside quant has better lifestyle. They use less complex techniques, no PDE or stochastics. Heavily on empirical finance, AI and statistics.

Hope this will help.

JB

What working environment would you enjoy being in?
What do you love doing for the rest of your career life?

Not sure which question would be easier to answer, but career satisfaction comes much closer when one knows him- or herself.

What are your goals?

 

[aoglobalent]

Echostate,

I would like to add another point to your original question, i.e. the four category’s you origanlly stated. I find that though I might not have an in depth hands on personal experience with the first four point you have made, I believe that there is a fifth point.

The fifth point is creating new models from scratch, such as Black Sholes, etc… This I find to be the most interesting aspect associated with derivates. Creating New Products from scratch, "Creating New Frontiers". I think that it is the most interesting, most fulfilling, and probably the most lucrative as well.

 

[echostate]

Echostate,

I would like to add another point to your original question, i.e. the four category's you origanlly stated. I find that though I might not have an in depth hands on personal experience with the first four point you have made, I believe that there is a fifth point.

The fifth point is creating new models from scratch, such as Black Sholes, etc... This I find to be the most interesting aspect associated with derivates. Creating New Products from scratch, "Creating New Frontiers". I think that it is the most interesting, most fulfilling, and probably the most lucrative as well.

Hi Aoglobalent,

I also have heard about the fifth class of quant you indicated. Somebody call them "the core quants". It seems that we (graduate students) cannot be such core quants: I heard that most core quants are established professors in math/stat/phy/finance.

 

[echostate]

I had some experience with sitting at a prop desk doing algo/arb trading.
To be honest, I am not so optimistic in this area, as the arbitrage opportunity is disappearing.

Derivative pricing can be a routine job, once you finish up your coding. Everyday you work under high stress.

Buyside quant has better lifestyle. They use less complex techniques, no PDE or stochastics. Heavily on empirical finance, AI and statistics.

Hope this will help.

JB

"Buyside quants heavily on empirical finance, AI and statistics", I'm really interested in this type of quants you mentioned.

Do you mean the quants working on quantitative portfolio management? Otherwise, what's the buyside quants you mentioned if neither portfilio optimization nor algo. trading?

Thanks!

 

[ljp99]

Buyside Quants -


Risk Management
Portfolio Optimization
Portfolio Screening
Databases
etc.


- A buyside quant

 

[echostate]

Buyside Quants -


Risk Management
Portfolio Optimization
Portfolio Screening
Databases
etc.


- A buyside quant

Great. Thanks, ljp99.

Are buyside quants divided into front/middle/back offices? If so, risk management is in the middle office while portfolio management is in the front office? BTW, database is IT support? Or they also do analysis work?

Thanks, again.

 

[ljp99]

Echostate -

I think youre categorizing people and jobs into too specific cells. Youre also categorizing companies too narrowly.

Quants (and other positions) can and do more than just 1 thing. My responsibilities include:

some risk mgmt
some optimization
some database work (data always has to be cleaned, even if its supposedly cleaned from your data vendor.
and various other responsibilites

Risk Mgmt is middle office - its not a profit center, if anything it could hinder profits.
Portfolio mgmt can be front office, but can also be middle office.
Database work is the data you are working on - and supplying to others - so its not IT related.