The finance industry is a complex subject that encompasses many specializations. Two common careers within the finance industry include equity analyst and investment analyst. Often times the job duties of the two careers mirror one another. However, equity analysts can work on the buy-side or sell-side, while most investment analysts work on the buy-side. In some instances, investment analysts work on the sell-side. Individuals interested in finance career should understand the difference and similarities between equity and investment analysts.
Buy-Side Equity Analyst
Hedge funds, mutual funds and asset management companies employ buy-side equity analysts. Many asset managers and hedge funds represent the investment interests of institutional investors. Buy-side equity analysts make investment recommendations in an effort to increase the company's asset holdings. Analysts research economic factors and specific companies that meet the criteria of the organization and make recommendations to portfolio managers who make the investment decisions. The data researched by buy-side equity analyst is only for internal use.
Sell-Side Equity Analyst
Most sell-side equity analysts work in investment banks. Sell-side equity analysts research specific industries and companies to make investment recommendations to clients. For example, a sell-side equity analyst may research a new initial public offering (IPO) to determine if it is a good investment. The equity analyst produces a report concerning the specific company, which is made available for external use. Some companies only allow clients to access reports made by sell-side equity analysts. Clients of an investment bank may include a buy-side investment company or private investors. When clients purchase investments based on the recommendations of sell-side equity analysts, the company receives a commission.
Investment analysts perform similar duties as buy-side equity analysts. Investment analysts research information concerning the economy, particular industries and companies to make investment recommendations. Banks, insurance companies, pension funds and asset management firms depend on the advice of investment analysts. According to information presented on the State of California Employment Development Department’s website, investment analysts research current events regarding the economy, national and international finance and industries. Investment analysts take the data compiled and produce reports regarding the financial securities of a company, industry or geographical region. When an investment analyst researches an industry, he also looks at external factors that may affect the industry, such as new competitors, processes and products.
The career requirements for equity and investment analysts are similar. The Bureau of Labor Statistics (BLS) refers to both types of analysts as financial analysts. According the BLS, equity and investment analysts must possess at least a bachelor’s degree in finance, accounting, business or a related field. Many companies require that analysts possess an MBA. The BLS states that most buy-side equity analysts are not required to obtain certifications. Some sell-side analysts must obtain certain state licenses to sell securities. Equity and investment analysts can pursue the Chartered Financial Analyst (CFA) designation.
- Bureau of Labor Statistics: Financial Analyst
- Bloomberg Businessweek: Debt vs. Equity Analysts: Whose Call Counts?
- FINS Finance: So You Want to Be an Equity Research Analyst
- New Mexico Network for Women in Science and Engineering: Investment Analysis / Brokerage
- U.S. Securities and Exchange Commission: Investment Advisors: What You Need to Know Before Choosing One
- State of California Employment Development Department: Investment Analysts