How much am I worth? Emerging markets fixed income analyst

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A panel of headhunters gives its assessment of typical London pay packages: Basic salary: about 65,000 (€94,000) -80,000; bonus of between 100-120% (with up to four years experience).

On June 1, the emerging markets world got rather smaller when eight former Communist countries joined the European Union, a move that took away their 'emerging' status. With most due to join the euro within a reasonable time frame, these countries' risk profile has significantly improved, which, for traders, means the rewards are less.

Although banks still monitor developments in such countries as Hungary, Poland and the Czech Republic, for the emerging markets fixed income analyst within EMEA - typically the most dynamic emerging market region - the focus is now on finding new core markets.

Richard Fraser, of RJF Global Search, says, 'The key is to find potential high returns within a relatively short time, although there is a great deal of risk involved in bond investments because prospects within emerging markets can drastically change with little notice.'

For those who follow Asia, China remains the main focus, although Malaysia, Thailand, India and the Philippines are in play. Closer to home and within EMEA, Bulgaria and Romania - not due to join the EU until January 1, 2007 - are also followed closely, as are Russia and Ukraine. In Latin America - not often covered out of London, with most international banks basing their teams in the US - the big plays continue to be Brazil and Argentina.

So how does an emerging markets fixed income analyst - or an EMFIA - spend his or her day? If they work in a large international bank, they will regularly follow local currency debt markets, preparing interest rate and foreign exchange forecasts for traders and most likely, weekly and/or monthly research reports.

They will be numerate, well-read and good communicators verbally and in print: typically, many will have a post-graduate degree, often in international relations but with a strong background in economics or applied economics to enable them to undertake technical analysis and mathematical modeling.

Marta Bollman, head of EMEA at Napier Scott, says, 'In general (these roles) include servicing fixed income research, fixed income trading and M&A departments and sales. They could also involve developing investment recommendations and trading strategies in the area of external debt (Euro and Brady bonds) and local currency fixed income.'

For the EMFIA working at an asset management house, the focus will be more corporate than country, with the individual looking at the risks involved in buying debt, either as primary debt or through the secondary market.

'They will look at the security of a company, the economic outlook, demographics, distribution channels and so on, to assess that organisations' future ability to repay the debt,' says Jeremy Canning, manager of Morgan McKinley's Asset Management Division. 'The higher the risk the security is considered, the higher the fixed rate of interest will be.'

So how much is the typical EMFIA worth? For the individual working at a fund manager, Canning suggests a starting salary typically of around 25,000-35,000 basic, moving up to 50,000-80,000 basic after around six years: bonus, payable upon individual, fund and company performance, can be anything between 25-100%.

A person working within a large international bank with around three to four years experience could expect to receive a basic salary of between 65,000-80,000 with a bonus of 100-120%; for those with six years-plus experience, the basic will increase to a maximum of 120,000 but the bonus will rise much more dramatically, to possibly as much as 300%.

Seems a fair reward for being able to identify the next emerging trend and staying ahead of the pack.

Commentary and figures supplied by Napier Scott, Morgan McKinley and RJF Global Search

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