This article will give you an overview of the various sectors of Investment Banking. It will cover the key players in the capital markets, as well as the different types of investment banks. This article will cover the top 100 investment banks, as well as mid-market banks and boutique investment banks. It will also explain how capital markets work and what makes them so unique.
Product Groups
A product group is a group within the corporate finance department of an investment bank that advises on a particular type of deal. Product groups can be divided into several categories. For example, an Equity Capital Markets product group would advise on equity deals, while a Product Group in Debt Investing would focus on debt investing. In general, product group roles don’t require a deep knowledge of one industry.
Some investment bankers argue that product groups are obsolete, and that industry bankers can now do most of the work of a product group. However, specialized experience is required for cross-border divestitures or broad sell-side auctions. As such, M&A groups won’t disappear anytime soon.
Industry Groups
Investment banking is divided into different industry groups, each with its own specialized focus. Some are focused on a particular industry, such as healthcare, while others are more generalist and cover multiple industries. A healthcare coverage group, for example, may specialize in biotechnology and pharmaceuticals. Another group might focus on real estate or gaming & lodging. There are also several product groups within investment banking, including the Leveraged Finance Group, which focuses on leveraged loans and high-yield bonds.
Sales & Trading
The sales and trading division of an investment banking firm is responsible for making and executing transactions between clients and investment firms. The trading desk of an investment banking firm employs a variety of traders who specialize in various investment areas. Some traders specialize in commodities, the gold market, or certain sectors of the stock market.
Job security in sales and trading can be low, but salaries are highly competitive. Many investment banks prefer to hire juniors and promote the most qualified candidates. To get a job in sales and trading, it is important to have a Wall Street-recognized certificate.
Equity Research
Working in equity research is a similar career path to that of an investment banker, but the primary difference is in the compensation structure. The compensation for equity research is usually much lower than that of investment banking. In investment banking, analysts are promoted every year and become associates or VPs after two to three years. They also receive regular salary and bonus bumps.
The role requires extensive research, writing, and phone calls. Associate equity research analysts receive similar training as sales analysts and are assigned to cover groups of stocks in specific regions or industries.
Fixed Income
Fixed Income investment banking offers clients a variety of investment options. A team of dedicated Fixed Income investment professionals adheres to a set of strict standards, including risk tolerance and time horizon. The team continuously monitors portfolio risk and offers state-specific strategies that can help achieve the desired level of returns. The Fixed Income investment banking team can also advise on how to structure a portfolio to maximize returns.
The fixed income industry focuses on government bonds, credit derivatives, money markets, commodities, currencies, and mortgage-backed securities. Working in Fixed Income also requires developing client relationships and pitching investment ideas.
