Your guide to our asset classes.
An asset class is a category of securities that banks trade and the related services they provide. Each has different market drivers, requiring different skills and areas of focus. Once you understand more about them, you can identify where your interests lie. As an intern at Barclays, you have the chance to rotate between all three.
Credit deals in debt generated by the lending and borrowing activity of governments, businesses and banks.
Equities deals in shares of individual companies that are traded on stock markets around the world.
Macro deals in “big picture” products like currencies, commodities and rates that are influenced by larger macroeconomic factors.
How does it work?
Banks lend money and then further trade those debts in the form of products such as bonds, loans, swap options and derivatives. Utilizing quantitative measures to determine a borrower’s ability to repay as they change over time is key to mastering the credit market.
Companies issue equity shares in exchange for capital from the market. The Equities desks help connect buyers interested in particular shares with sellers who currently have those shares.
Macro monitors global geopolitics, and changes to monetary and fiscal policy, and advises on the likely effect on investments both to those taking views but also to those using these products as hedging vehicles for larger portfolio needs.
Key Market Drivers
All asset classes are affected by the day-to-day mood of the investment community, which is sometimes known as ‘market sentiment’. In addition, each has some of the following more specific drivers:
Credit is driven by macro events as well as company specific events, news and actions. Some products are more impacted by one than the other. For example, a single corporate bond is more impacted by micro events while an index is driven by macro events.
Equity prices are affected by variables specific to each company. For example, an automotive company’s stock price is negatively impacted by a product recall, or a toymaker makes more profit than expected when its toy is a surprise hit with 5 year olds.
Elections, weather events and changes in government policy are just some of the things that influence the financial markets generally, including the value of currencies, commodity prices and interest rates.
Where you could work
Here are some of the larger desks in each asset class at Barclays.
- Corporate/Investment Grade Credit: This desk buys and sells securities and derivatives (tradeable assets originating from corporate debt) whose issuers are considered likely to meet their liabilities.
- High Yield Credit, Leveraged Loans, and Distressed Credit: These desks buy and sell more speculative, higher-risk assets, issued by performing companies as well as those facing bankruptcy, to qualified institutional investors and hedge funds across the globe.
- Emerging Markets: Traders on this desk are usually divided by geography or sector and focus on the opportunities in debt issued by governments and corporations in developing economies.
- Securitized Products: Securitization is the process of pooling cash flows and creating structures that match clients’ investment needs. This business provides clients with investment opportunities in bonds backed by cashflows from residential and commercial mortgages, credit cards, student loans and auto loans as well as a broad spectrum of esoteric cash flows.
- Sales Trading: This desk manages relationships with trading clients, providing them with market information and trade ideas, and helping to connect buyers and sellers.
- Institutional sales: This desk manages relationships with portfolio managers and analysts at institutional clients, providing them with access to Equity Research and other resources to help them make investment decisions.
- Cash Trading: Organized by sector, this desk manages risk and provides liquidity to execute clients’ trades while providing market information to colleagues and clients.
- Structured Solutions and Derivatives: Some of the more quantitative desks on the floor, these areas work with various clients on more complex – oftentimes bespoke – products to solve client needs.
- Interest Rates: This desk develops and uses innovative strategies to mitigate risk and optimize revenue from changes in interest rates made by central banks.
- Commodities Sales and Trading: This desk manages risks arising from the variable prices of key commodities such as oil, gas and precious metals.
- Foreign Exchange (FX): This desk buys and sells global currencies, while helping institutional clients manage risk.
Which is the best fit for me?
Go for Credit if you want to:
- Work across a broad range of products
- Use your analytical skills and love of mathematics
- Interact with other teams and customers all day
Go for Equities if you want to:
- Understand what drives stock values up or down
- Move between desks and build diverse experience
- See the connection between investment banking transacations and the market
Go for Macro if you want to:
- Look at the bigger picture across asset classes
- Deepen your interest in macroeconomics and geopolitics
- Understand how world events affect investments and the interconnectivity of the global markets