The Buy Side

The buy-side is where the money that gets invested in the markets actually lives. Asset managers take capital from clients, pension funds, endowments, insurers, wealthy individuals and other institutions, and invest it across stocks, bonds and other assets in pursuit of returns.

Unlike investment banks, who mostly make money on the spread between buying and selling for other people, asset managers make money by owning assets themselves and growing their value over time, largely through management and performance fees charged to their clients. That means their incentives are directly tied to the returns they generate: if the fund does well, so do they.

Buy-side firms come in several flavours, each with a different approach to risk and return:

• Traditional asset managers and mutual funds, who invest client money in relatively long-only portfolios across stocks, bonds and other assets
• Hedge funds, who take more aggressive positions, often using leverage and short-selling, in pursuit of higher (and riskier) returns across any asset class
• Pension funds and insurers, who manage vast long-term pools of capital and prioritise steady, reliable growth over decades
• Sovereign wealth funds, who invest on behalf of entire nations, often across both public and private markets

Whatever type of firm you're at, the job is the same at its core: decide what to buy, what to sell, and when, in order to generate the best possible returns for the people who trusted you with their money.