Booming quant jobs: a recipe for efficiency or risk?
Negative sentiment rising from the war in Ukraine has failed to dampen the ongoing appetite for quantitative talent. But as quant jobs outgrow roles in operations and technology, are banks becoming more efficient or brewing up another storm led by the smartest guys in the room?
The chart below shows the growth in the number of jobs posted to eFinancialCareers in Q1 2022 compared to Q1 2021. Credit, quants and commodities roles have been the winners while trading, technology and FX have suffered. While global markets revenues for banks broadly declined in Q1 2022, Goldman Sachs had a stellar quarter in their commodities arm and it is no surprise that the U.S. – which posted steady job growth in March – is the region driving most of this year’s hiring.
Growth in quant roles is not, however, being matched by a hiring spree in operations or (perhaps surprisingly) technology, suggesting quants are being hired to streamline and automate. Some have perceived dangers in this. Rob Mannix, Quant Investing Editor at Risk.net, sees it as a worrying development, particularly in light of the war in Ukraine. Russian sanctions – and their associated problems of pricing anomalies, exchange closures and margin calls – have the “potential to confound the most elegant ideas.”
Nonetheless, trend-following quant hedge funds are having the best year in almost two decades, having piled into commodities prior to Russia’s invasion. Prestigious New York quant trading shop Jane Street has raised salaries by at least 20% amidst a war for talent. The finance job market is fickle, so as M&A bankers did in their own war for talent in 2021, it's probably a good time for the quants to start polishing their CVs and preparing for what can be especially challenging interview questions.
The good news is that quant hiring may remain strong for a while. Quants these days aren't just involved in trading and derivatives pricing, many are now "strats" involved in automating functions that previously involved human beings. Last time there was a major crisis in Asia, Long-Term Capital Management, a hedge fund that was home to some of the smartest quants in the 1990s, was brought down by margin calls and exposure to Russia. This time, quants are involved in more prosaic activities.
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