Best Buy-Side Fixed Income Trading Desk: Eaton Vance
Eaton Vance won Best Buy-Side Fixed Income Trading Desk in the 2020 Markets Choice Awards.
Markets Media caught up with Mike Nappi, Manager of Investment Grade Corporate Trading at Eaton Vance, to learn more.
How is Eaton Vance’s fixed income trading structured?
Eaton Vance operates several coordinated trading desks that provide dedicated trading to the portfolio management teams or asset classes they support. This allows traders to be intimately familiar with portfolios under their purview, suggest investment approaches based on market activity, and encourages sharing information across trading desks and asset classes.
Describe the ethos of Eaton Vance’s FI trading desk — what are the primary capabilities and how does it differentiate vs. peers?
Our goal for the investment grade trading team is to increase the level of knowledge of all traders on our team so that we can effectively support our portfolio managers, regardless of the investment strategy. Most traders have multiple roles including portfolio construction and implementation, and in some cases, portfolio management. Creating a collaborative, deeply skilled trading team has allowed us to be more efficient, deliver best execution on our trades, and address client needs.
What are recently completed and/or ongoing initiatives to trade better?
In late 2019 we modified our approach around the new issue process that gives our trading team greater flexibility. Due to its manual nature, the investment grade new issue market can be cumbersome and time consuming. Most of the information gathering for these new issues requires phone calls and chats between buy-side and sell-side. We’ve developed a rotating schedule that allows one trader to manage the full investment grade new issue process for a particular day. This allows the remainder of the trading team to address secondary trading opportunities. The daily rotation ensures we stay updated and active to bring fresh insights and trading ideas to both the primary and secondary markets. The deeper skill set of all our traders allows us to be flexible and adjust to meet client and portfolio demands, as necessary. With a record over $850+ billion of new investment grade issuance as of mid-May 2020, this has paid off.
How have Eaton Vance traders adapted to the market volatility we’ve seen in recent months? How is this a challenge and how is it an opportunity.
We have a seen tremendous opportunity in all-to-all trading, particularly with the volatility over the last few months. At times normal market participants stepped away, which created opportunities for us when selling and asking for liquidity, and also when buying.
How do automation and AI fit into Eaton Vance’s trading, and how will they fit in the future?
We are big proponents of automation and AI. The Eaton Vance investment grade team was one of the earliest adopters of investment grade auto-execution in the IG market. We continue to utilize new and different technologies for pre-trade and post-trade opportunities. These newer AI and automation tools also play a large role in portfolio construction, as well as post-trade execution analysis.
What do you see as the future of buy-side fixed income trading?
We believe the future of buy-side trading will be a mix of traditional, fundamental trading and technology-enabled automation. Some of the big decisions facing the industry include voice and interpersonal trading versus electronic trading, and venue selection. These decisions will be pivotal in determining execution quality that goes far beyond traditional bond and relative value analysis. Technology will play a bigger role for both and those able to balance new ideas with more traditional concepts will be the most successful.
The bank gains direct access to the forestry sector and will build a carbon sequestration platform.
European regulators are increasingly focused on product governance and distributor oversight.
The conversion includes four Dimensional Fund Advisors US tax-managed mutual funds with $29bn in assets.
Assets invested in global ETFs and ETPs broke through $9 trillion at the end of May 2021.
Integration of Baringa’s models will enhance Aladdin Climate’s capabilities.