For both large and small investors, research is critical in making informed investment decisions. A buy-side analyst is employed by an investment firm, such as an institutional mutual fund or a large hedge fund, to assess investment opportunities. This professional assists with financial market buy and sell decisions. An investment adviser decides where to invest large sums of money for his or her clients based in part on research from a buy-side analyst.
A sell-side analyst is a financial professional who produces market research for external clients, such as investors, on companies, sectors, and regional economies as an alternative to a buy-side analyst. However, research produced by a buy-side analyst is usually kept within the firm and is not intended for external clients. Both types of analysts are important to the financial community, and one side may use or base research from the other to add value and provide a more complete picture.
Despite the fact that investment advisers are licensed to make important investment decisions on behalf of a firm and other investors, they rarely make decisions based solely on their own research. Instead, these hedge funds hire a team of buy-side research analysts to spot trends and point to potential buying or selling opportunities in the broader markets. Although an investment adviser makes the final decision on an investment, it is frequently a team effort that requires buy-side analyst input to make informed decisions.
Financial analysts come in a variety of shapes and sizes. A buy-side analyst, for example, might concentrate on the equity or debt capital markets. Analysts may be employed solely on the equity side of the financial markets by small investment firms.
A buy-side equity analyst is in charge of making stock market predictions. This individual will make stock or sector recommendations to an investment adviser, as well as assess regional opportunities. He or she assesses the profitability of a company in relation to its debt and makes financial decisions. This analyst is usually assigned to a specific industry, such as telecommunications or lodging, and compares stock performance within that group.
Debt, which is classified as fixed-income markets, is the other side of the financial markets. This is due to the fact that debt investors receive fixed returns over the course of their investment. An investment grade or high-yield bond is evaluated by a fixed-income buy-side analyst, who often assigns a rating to these financial instruments. The likelihood that a bond issuer will make good on its income payments is reflected in its rating. An investment-grade bond has a higher rating and is a safer bet than a high-yield bond.