March 29, 2011
Raj Iyengar ('10) Heads Into the New World of Financial Engineering
MFE Grad starts new career as a strategist for Morgan Stanley
LOS ANGELES -- Raj Iyengar (MFE '10) began his career with Macquarie Group in Sydney, Australia in 2002 and moved to the company's Los Angeles office in 2006. "I was working on the energy trading floor where we structured energy trades with significant embedded optionality," he said. "Those markets can be very complex and companies have to deal with a myriad of risks on their books." In the backdrop of the financial crisis of 2007, it became clear that finance professionals and companies alike needed new skills to meet the challenges ahead.
In January, 2010, Iyengar enrolled in UCLA Anderson's Master of Financial Engineering (MFE) Program. "I felt it was time to get rigorous training in the technical skills required to more effectively meet future challenges," he said. He explained that the MFE Program teaches students to build, use and most importantly be aware of any potential limitations of mathematical models of complex financial processes. "These models can help you understand how much risk or opportunity an investment can entail. This allows you to price, hedge or advise on an investment appropriately."
Iyengar says the MFE Program complemented his undergrad background in actuarial science, which he likens to applied statistics. He notes that many people in the program have strong analytical backgrounds as well as keen commercial acumen.
Midway through the MFE Program, Iyengar accepted an internship with Morgan Stanley where he got to experience life in New York City. All MFE students do summer internships as part of the program.
"I remember preparing for my internship interview," he said. "I went to meet with Professor Eduardo Schwartz, a prolific financial economist and Professor of Finance at UCLA Anderson. I asked him a question about a specific type of asset that I mistakenly felt he might not have had much experience with. However, I was surprised to discover the command he had over the subject. I later learned that he had written one of the seminal papers on the valuation of these securities. In fact, I found that he had written key papers for almost every asset class in existence. Such is the level of academic talent that is at the disposal of the MFE Program for the benefit of its students."
After graduation in December, Iyengar joined Morgan Stanley full-time and moved back to New York. He considers the job a perfect fit.
"I'll be working in the fixed income group on the Securitized Products desk, which is responsible for trading bonds, mortgage-backed securities and asset-backed securities. These are deeply technical products that require a strong command of the concepts I learned in the program. I'll be helping to ensure that we calculate our risk properly, price trades correctly and help develop the smartest and most creative strategies. And I feel the MFE Program has given me the skills to do those things."
In his new job, Iyengar will use the financial and mathematical tools he learned in the MFE program. "If a trader spots an interesting opportunity and needs an analytical eye on the details, I'll step in and develop a model or tool to better understand the opportunity. If they want a better way of calculating risk, I might advise on that. Or I might conduct some market research. This role will allow me to be a thought leader on my team. I'm excited about it because it's directly relevant to what I've been studying for the past year."
Iyengar says that the financial crisis prompted rapid and continuous change in his industry. Firms are reviewing their technical procedures, embracing new analytical tools and hiring financial engineers. "The industry is definitely evolving," he said. "You don't deal with a crisis by deciding to avoid complex securities. Instead, you solve problems by applying your best people to them."
Some of the financial industry's most widely used models have been developed at UCLA Anderson. "Professor Longstaff and Professor Schwartz actually have a model named after them called the Longstaff-Schwartz Model," Iyengar explained. "This model is used by investment banks and is an elegant and sensible way to price securities that are very complex."
"The past few years have been a historic time to be in the financial industry," said Iyengar. "I think there are great opportunities ahead in the financial markets and I look forward to applying what I've learned. My goal is to become a leading professional in fixed income and use the tools of my trade to add value to the desk on a daily basis. It's extremely exciting and I look forward to it."Contact Information
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