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Buy Side

The buy side refers to the segment of the financial markets that focuses on purchasing investment securities. It includes institutional investors such as mutual funds, pension funds, hedge funds, private equity firms, and insurance companies. These entities are called "buy side" because their primary role is to buy securities and manage portfolios to generate returns for their clients or beneficiaries. The buy side is driven by investment strategies and research to make informed decisions about asset allocation, security selection, and risk management.

Example

A hedge fund on the buy side might purchase shares of a company it believes will outperform the market, based on its in-depth analysis and research.

Key points

• The buy side focuses on purchasing securities and managing investment portfolios.

• Includes institutional investors like mutual funds, hedge funds, and pension funds.

• Driven by research and strategies to achieve investment returns.

Quick Answers to Curious Questions

The primary function is to purchase securities and manage portfolios to generate returns for clients or beneficiaries.

The buy side focuses on buying and holding securities, while the sell side involves firms that sell and trade securities, provide research, and facilitate transactions.

Mutual funds, hedge funds, pension funds, private equity firms, and insurance companies are typical buy-side entities.