A buy-side analyst is one who works for an institutional investor such as a fund management company. Most of a buy-side analyst's work is intended primarily for internal use, although some of it may be shown to clients.
Employing buy-side analysts, rather than relying on the work of sell-side analysts, has a number of advantages:
- The independence of buy side analysts from the companies they cover is more certain.
- They can be asked to concentrate on the companies and sectors of the greatest interest to the money manager, and in the context of specific strategies, goals and portfolios. For example, they can consider not just is "X a buy?", but "is X a buy for the growth portfolio we run for client Y which already has a lot of stocks from X's sector?".
- Buy side analysis is exclusive and therefore can be a source of advantage both in improving performance and in differentiating a fund manager to clients, This is why some fund managers advertise the strength of their buy side teams.