Broadly speaking, the investment world can be catagorized into two groups:
a) Sell-side: Entities who have an investment product and want to sell it
b) Buy-side: Entities who have money want to buy an investment product to generate returns.
Who are Sell-side analysts?
Sell-side analysts are analysts who work in sell-side entities. Some examples of the sell-side entities are Brokerage Houses and Investment banks. Sell-side analysts basically sit in the research department of a brokerage firm and they provide research services to the clients of that brokerage firm. Research services include research reports, collecting data and responding to individual queries. Some examples of local brokerage houses are KASB securities, JS securities, Arif habib securities, Invisor securities etc. Apart from individual investors, there are many funds, banks and investing entities (institutional investors) which buy and sell securities through the brokerage houses. In local industry, individuals are not much inclined to read the research reports provided by sell side analysts but the institutional investors do follow the research reports and value them.
Who are Buy-side analysts?
Buy-side analysts are analysts employed by the buy-side entities. Some examples of the buy-side entities are mutual funds, banks, insurance companies, and pension funds. These entities employ analysts so that they discuss investment ideas with the sell-side analysts, critically analyze the investment ideas presented by the sell-side analysts, and finally make recommendations to their management. Research conducted by the buy-side analysts is not published.
If there is anything that a buy-side analyst is not sure about, he calls the sell-side analyst and asks him to work on it and provide data. Owing to this, sell-side analysts actually have to work harder as there are different queries to which they have to respond apart from regular research. Moreover, they need to continuously come up with new investment ideas for the buy-side. And that is where you actually learn. In local industry, sell-side research experience is considered better that the buy side research experience owing to the aforesaid reasons. Therefore, those who want to start career in investment industry, it is recommended to start from a reputed brokerage house with strong research team on sell-side, spend reasonable time there, and then eventually move the the buy-side.