The buy-side sector growing the fastest? Systematic bond trading - Business Insider

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Firms like AQR, Blackstone, and Point72 are all leaning into systematic strategies in bond trading, and industry experts expect the quant hiring frenzy to only increase in 2021

, or investors applying quant strategies to fill orders, there is no denying the rise of systematic trading in corporate bonds, Izzy Conlin, US institutional credit product manager at Tradeweb, told Business Insider. "Both kinds of participants are absolutely using these systematic strategies, they just may be using them in slightly different ways," she added.

AQR, which manages $138 billion, has a long history of applying quantitative strategies to various markets. Bond trading is no different. Tony Gould, a managing director on AQR's fixed-income team, said the firm first began trading credit systematically around 2013. "There's increasingly a recognition of the need for different sources of return in portfolios beyond just leaning on credit risk, which has then led to an exploration of more systematic ways of trying to add returns," he said. , over the long term, tend to be persistently long on different forms of credit risk. As a result, they usually suffer when equity markets drop because credit risk is more highly correlated with equites.

"I think we can build another significant leg to the firm," he said during the Goldman conference. "This is the start really of quant in junk and in other parts of fixed income."Selby Jennings' report found that the rise in these types of strategies has subsequently increased the need for traders that are familiar with these markets.

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