Investment Analyst

Reviewed by Vishnu | Updated on Aug 27, 2020

Who is an Investment Analyst?

An investment analyst is a professional who researches financial instruments and securities for the purpose of recommending the purchase, sale and holding of securities. Investment analysts are predominantly hired by mutual fund houses, investment advisors, and brokerage houses to research securities and prepare recommendations for various purposes.

These analysts who have large-scale expertise in the analysis of the financial data have a great knowledge of the wide array of formulas that can be utilised to evaluate an investment.

What is the role of an Investment Analyst?

The role of an investment analyst is to come up with recommendations for the purchase or sale of securities on the basis of the prevailing economic conditions, market trends, and the company's financial and investment information.

As part of the job, analysts are required to stay updated and analyse all the developments in his sector, business, and industry to create a financial model that serves the purpose of estimating its outcome in the economy. The financial model allows analysts to evaluate both the historical as well as contemporary information.

Types of Investment Analysts

Investment Analysts can be broadly classified into two types:

  • Sell-side analysts: Sell-side analysts are financial professionals who work under big financial institutions. The primary role of a sell-side analyst is to evaluate the financial fundamentals of the companies, which the institution is planning to make public and recommend the ones which can earn the most profit in doing so.

  • Buy-side analysts: Buy-side analysts, on the other hand, are employed under fund managers at mutual fund houses and brokerage firms. The buy-side analysts not only research and evaluate companies in the fund house's portfolio, but they also consider the other companies which can prove to be a profitable investment in the future.

Once the companies under their employer's portfolio have been analysed with proper research, the analysts then reach out to the management with suitable buy and sell recommendations.