We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What does "Buy Side" Mean?

By Danielle DeLee
Updated: May 17, 2024
Views: 7,019
Share

“Buy side” is a term used in finance to refer to a category of financial institutions. Generally, buy side institutions are the buyers in financial markets. They include entities like commercial banks, insurance companies, pension funds and mutual funds. These institutions pool funds from their customers to create a portfolio which they manage in order to generate returns. These returns may be retained by the company, as in the case of commercial banks, or returned to the investor, as in the case of mutual funds.

The financial world is made up of marketplaces. These markets are filled with financial products: essentially, traders are exchanging money for money with conditions. Financial markets, like goods markets, can exist only if there are people willing to buy and people willing to sell. Unlike goods markets, firms that sell financial products are usually not major buyers of other types of financial products. Finance can be separated into two basic groups of buyers and sellers.

Buy side firms are the actors in the market characterized by the assets they hold. Generally, they take money from investors to create a portfolio of investments. For example, a mutual fund company uses the money it gets from shares it sells to acquire a basket of assets, and the returns on that basket determine the payouts shareholders see. The company’s characteristic activity is accumulating a portfolio, which means the mutual fund company is buy side.

Sell side firms, the counterpart to buy side institutions, create the products sold in financial markets. These are the entities that issue bonds or underwrite stocks. These firms encourage investors to buy their financial products. The actions of these institutions create primary markets where newly originated goods are sold. Secondary markets, in which investors trade amongst themselves, are the domain of the buy side; the two interact, however, when buy side institutions wish to make large trades.

These terms are also commonly used to describe financial analysts. Essentially, these two categories of people do the same job. They both advise investors on which assets to buy, and the label an analyst carries depends on the nature of the firm he works for. Sell side analysts promote the products their companies create, so their advice is publicly available. Buy side analysts try to gain an advantage for their firms, so their advice is kept secret.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/what-does-buy-side-mean.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.