banking has always been considered one of the traditional homes of an MBA.

The sector offers “a breadth of opportunity and the capacity to progress your career rapidly,” says Graham Hastie, director of career services at London Business School.

The appeal has not been lost on the LBS MBA class of 2006, with 42 per cent of MBAs opting for careers in the financial services sector. However, although investment banking retains its grip on the majority of LBS students – 23 per cent, Mr Hastie says other areas are attracting interest.

Of the class of 2006, 6 per cent of students went into private equity or venture capital, 4 per cent into retail or private banking. A further 4 per cent went into asset management, corporate or commercial banking drew 4 per cent and the remaining 1 per cent moved into other financial areas.

However, Mr Hastie adds that, in spite of “huge demand” from students for positions in private equity, it remains a very small industry, in that openings are few and far between. While investment banking offers a structured career path, this is not the case with private equity, he says. Opportunities occur through networking and personal connections.

Private equity, he says, allows more room for creativity because it is a very varied sector – fund raising for investment purposes or looking for opportunities in which to invest, for example. But only a few students each year secure a placement.

The hedge fund, investment management, private equity and wealth management sectors are also turning the heads of MBA students at the Judge Business School, Cambridge. “Competition in this area of the job market is often fierce,” says Cathy Butler, director of MBA careers at the school – although tenacious MBAs can be successful, she adds.

There is a similar trend at Wharton in the US, where 5.5 per cent of the class of 2007 have accepted summer internships with hedge funds or other investments. This compares with 3.1 per cent of the class of 2006 who accepted full-time jobs in that sector.

The private equity/venture capital/buy-outs sector also shows more interest from this year's Wharton interns – 7.8 per cent compared with 6.8 per cent of the class of 2006 who accepted job offers.

At Kenan-Flagler, Susan Amey, director of the MBA career management sector, says student demand for private equity placements outstrips job offers, with only one or two students from the school securing a job each year. To try to satisfy this demand, the school runs the Carolina Venture Fellows programme, which each year places a select few students in an apprenticeship with a venture capital firm.

“The days when traders were the poor relations of their investment banker cousins are now behind us,” says Lindsay McQuade, head of postgraduate employment at Cass Business School in London. “With the explosion of derivatives and record profits being made on trading floors across the city, front office professionals are spreading their influence at the most senior levels.”

One consequence of this, she adds, has been a rise in demand for in-depth quantitative skills, supplied by highly numerate students with MScs.

Ellen Miller, head of European graduate recruitment and development for Lehman Brothers, has also noted this trend. She recruits about 50 MBAs each year in Europe as summer interns, with roughly half placed in investment banking and the rest in capital markets or, in small numbers, investment management. Between 60 to 75 per cent of interns subsequently receive job offers.

However, while MBA recruitment into investment banking has remained fairly static, the investment bank is taking on more and more analysts. Many of these have masters in management degrees – “a fantastic degree,” she says.

In many ways, Ms Miller adds, students with masters degrees are easier to place since they come from a larger pool and enter at a lower level.

In Europe, she notes, the gap between MBAs and masters students is diminishing since many of the latter are aged 24/25 and have intern experience embedded in their degree. “So hiring MBAs to place in a generalist pool is more difficult now and the role of the MBA is even more in question.”

The growing demand for students with quantitative skills is certain to continue, fuelled by the US Sarbanes-Oxley Act and the Markets in Financial Instruments Directive (MiFid) which have increased regulation and sparked demand for experts in related fields.

MBAs are looking beyond investment banking into these sectors. But whether they can fight off their rivals with masters degrees to enter fields that are small and competitive remains to be seen.