So you want to be a research analyst, do you want to work on the buy side or the sell side?
Part 1 - The Sell Side described sell analysts in general. Part 2 moves on to describe buy side analysts.
Part 2 – Buy Side Analysts
Buy side analysts perform many of the same functions as sell side analysts: research companies, financial modeling, make buy/sell recommendations, etc. However, buy side analysts will use research from many sell side analysts and combine it with their own research to make recommendations.
The main difference is that buy side research is proprietary and is used for the purpose of managing a portfolio of their clients’ money. Buy side clients are pension funds, endowments, high net worth individuals, retail investors, etc. that give their money to a professional investor to invest on their behalf. If you’ve ever owned a mutual fund you’ve given your money to the buy side. Hedge funds and mutual funds are probably the two most common types of investment firms on the buy side.
So while a sell side analyst’s job is to sell research to buy side clients, the buy side analyst’s job is to “sell” research to portfolio managers. Portfolio managers make the ultimate buy/sell decision, but they arrive at that decision utilizing the research and recommendations from buy side analysts.
So what is the best path for me? Find out in Part 3 - Buy Side vs. Sell Side …