As the saying goes for every action there is an equal and opposite reaction. Could this be the case for the asset management sector, as the world’s largest investment banks reduce their trading of distressed assets?
Investments remain a highly volatile market
A typical supply and demand balancing act, this recent reduction in purchasing by investment banks has reduced the average price of distressed assets, in some cases far below their market value.
Spotting a potentially lucrative opportunity as larger institutions draw away from the market, smaller hedge funds and asset management firms have been busy buying up risky assets. As a result, the demand for front and middle office credit derivative specialists is on the rise, especially within boutique buy-side organisations, keen to take advantage of the reduced competition and falling asset values. Candidates with fixed income or credit backgrounds are the most highly sought after.
But despite positive news announcing the end of the recession and an upturn in the banking sector, investments remain a highly volatile market. But as the larger institutions hold off on risky ventures and boutique firms take smaller scale risks, this re-balance of purchasing power could contribute to a much needed stabilisation of the banking sector.
