Buy Side and Sell Side: Key Things You Need to Know

March 09 2021

Anthony Tan

Understanding the financial and investment industry requires a recognition of the primary entities operating within it: buy-side and sell-side firms. While these terms may seem difficult to differentiate initially, there are marked differences between these two types of firms. At the core, sell-side firms involve initiating and trading securities: corporations, advisory firms, and investment banks fall into this group. As for buy-side purchasers, these often consist of pension funds, hedge funds, and individual investors referred to as ‘investment managers’.

In order for anyone to take part in this money game successfully, it is important to comprehend the fundamentals of both sell-side and buy-side operations for accurate execution of deals or investments. Any investor who truly intends to get a foot in the door must become familiar with how these work according to what suits them best.

What are their functions?

Sell-side firms are responsible for conducting equity research and providing advice to their clients. Through research, they examine stocks and the performance of various companies to gain insights into future financial states. The analyses encompass quarterly results, balance sheets, and any available public data, all condensed into annual reports. On the other hand, buy-side firms are those with a pool of funds who are looking to make investments based on the advisories provided by the sell-side companies. By partnering together, these two entities can help shape secure market investments for each party’s benefit.

What are the goals?

Sell-side firms try to predict market fluctuations and identify profitable investments for their clients through research and close monitoring of various assets, such as stocks, bonds, and currencies. After identifying potential opportunities, they attempt to convince investors to buy and sell through them while ensuring that all transactions are conducted ethically and legally.

In contrast, buy-side firms manage portfolios that match the needs and goals of their clients, striving to maximize investment returns. They purchase securities on behalf of their clients using stock exchanges and other markets. These securities can include equities, fixed income, or derivatives. Buy-side professionals are responsible for buying and selling assets to ensure high levels of liquidity and minimize portfolio risk for their clients.

What are the qualifications for a Sell Side Analyst?

Sell-side analysts are essential in enabling sound investments for their clients. To deliver the value to their clients, analysts must work with skill and diligence. From creating applications for data collection to producing visual displays of models, analysts must demonstrate a broad array of abilities including analytics and quantitation skills coupled with strong writing and communication capacities. Reports are used as bases for investments should also be publicly accessible to guarantee proper use of empirical research results.

What are the qualifications for a Buy Side Analyst?

Buy-Side Analysts need to pay attention to small details due to the critical nature of their job. These analysts create reports not publicly available, using information they obtain from the sell-side. Buy-side analysts play a crucial role in providing accurate and timely recommendations by staying informed of developments in finance news. Their responsibilities go beyond making ‘buy’ or ‘sell’ decisions. They are expected to provide meaningful insights into investment strategies and exploit investment opportunities for their clients. This expertise requires significant knowledge and skill development.

Last Updated: March 2026. This article has been reviewed and updated to reflect current market conditions and the latest analyst data available on AnaChart.

Buy Side vs Sell Side: FAQ

What is the difference between the buy side and the sell side?

The sell side (brokerages and investment banks) produces research, ratings, and price targets and sells it to investors. The buy side (asset managers, hedge funds) invests money and consumes that research. AnaChart tracks sell-side analysts’ price-target accuracy.

Do buy-side and sell-side analysts do the same job?

No. Sell-side analysts publish public ratings and targets for many clients; buy-side analysts research privately to inform their own firm’s investment decisions. The public price targets AnaChart scores come from the sell side.

Why does the buy side care about sell-side accuracy?

Because they consume sell-side research, knowing which analysts have actually been right helps them weight it. AnaChart’s per-analyst accuracy records exist for exactly that purpose.

Related on AnaChart: browse the top performing analysts by sector, and compare platforms in AnaChart vs TipRanks.

For institutional teams: AnaChart’s full analyst price-target and accuracy dataset — every analyst, every target and revision since 2004 — is available warehouse-native through AnaChart Corporate Access, delivered straight into Snowflake or Google BigQuery with no ETL.