The buy-side is comprised of firms in the financial industry that purchase securities and are accompanied by account investment managers, pension funds, and hedge funds.
The buy-side is composed of those that buy and invest large sums of securities with the intention of generating a lucrative return or have their funds managed.
The Buy-Side Explained
In terms of Wall Street, the buy-side includes investment institutions that purchase securities, stocks, or other financial instruments with the aim of satisfying their client’s portfolio demands.
Through the analysis and acquisition of underpriced assets, buy-side entities purchase these assets with the prediction that they will appreciate.
Moreover, the largest buy-side participants include firms such as BlackRock, The Vanguard Group, and UBS Group to name a few.
It is important to note that firms such as BlackRock are able to influence market prices as a result of placing large investments under single entities while the Securities and Exchange Commission (SEC) requires a quarterly 13-F filing for all holdings bought or sold by buy-side managers.
What differentiates buy-side investors from other traders would be the advantages that are yielded to them.
Buy-side investors not only have access to a much broader range of trading resources and market insight but also tend to possess decreased trading costs through large lot acquisitions.
To sum up, firms work with buy-side analysts to provide research recommendations that are kept exclusive to those participants of the firm while all analysts are overseen by regulations set forth by the International Organization of Securities Commissions (IOSCO).