What does an Investment Analyst do?
An Investment Analyst collects, evaluates and interprets financial data, and uses that information to evaluate a company’s risk and return potential. They also create financial models to forecast future performance.
Depending on the position, analysts can also monitor macroeconomic trends and other factors that impact financial performance or have a narrow focus on specific sectors and industries. The role is data-intensive and requires strong mathematical and analytical skills.
This role shares some similarities to a Financial Analyst – explore related role.
Key skills
- Analytical & quantitative
- Communication
- Problem-solving
- Strategic thinking
Different types of Investment Analyst
Sell-side Investment Analysts
- Work for the research arm of investment banks whose clients include institutional investors
- Provide in-depth analyses of companies or sectors to support clients in their investment decision making
- Based on their analysis, may assign a rating to a company such as a "buy", "sell" or "hold"
Sell-side analysts can significantly influence market movements, especially when their recommendations lead to substantial price shifts. This is why analysts must engage in thorough, independent and unbiased analysis, supported by appropriate research.
Buy-side Investment Analysts
- Work for institutions that manage money on behalf of clients such as asset managers, pension funds, and insurance companies
- Focus on identifying and evaluating investment opportunities, analyzing company financials and prospects, and generating financial models to help portfolio managers in their decision making
- May cover multiple sectors of responsibility, providing a broader scope of work than sell-side analysts
- Combine their own research with interpretations of existing sell-side research to provide actionable solutions
Buy-side analysts play a critical role in shaping the investment performance and returns that their institutions deliver to clients (for example, pensioners). With experience, they may advance into key decision-making positions such as portfolio managers or asset allocators.
Becoming an Investment Analyst
Qualifications
Most entry-level Investment Analyst roles require a bachelor’s degree in accounting, finance, business administration, or a related field like statistics, economics, or general business. In some cases, several years of relevant experience may be sufficient, but a degree will likely make you a more competitive candidate.
Who hires Investment Analysts?
Investment Analysts could be employed by large institutions like:
- Investment banks
- Insurance companies
- Mutual funds
- Hedge funds
- Pension funds
- Securities firms
- Investment firms
- Private equity groups
- Venture capital firms
- Government agencies
- Corporates
Check out a typical job description
Most job descriptions for Investment Analyst roles, whether buy-side or sell-side, include the following key responsibilities:
- Research industry-specific financial developments including broad economic trends and business trends
- Analyze financial statements to evaluate investment opportunities
- Create financial modeling for investors to find profitable investments
- Recommend individual investments or set of investments
- Assess the performance of stocks, other types of investments, and bonds
- Translate financial data into detailed presentations and easy-to-understand financial reports
- Communicate with C-suite executives of the companies you are researching
- Stay up to date with new technologies and market conditions
Valuable attributes of an Investment Analyst include industry or sector expertise (including awareness of the regulatory environment), awareness of global current events, and interpersonal skills.
Now let’s talk career progression
Where this role could take you
The next step on your career path is likely to be a Senior Investment Analyst. This could involve looking after Junior Analysts and using their research findings to finalize client recommendations or insights. You could also network directly with clients.
Depending on the Senior Analyst’s position on the buy side vs. the sell side, you may also need to travel for client meetings and presentations.
Tips for progressing to a senior role
- As a sell-side analyst, demonstrate you have good communication skills and can develop client relationships
- Cultivate management access with the companies you are covering
- Show you can think strategically on behalf of clients
Your future
Career advancement for Senior Analysts can include becoming a Portfolio Manager or Fund Manager – this is where you'd manage a company's investment portfolio. You could also lead specialized research teams for regional or global markets.
The right role for you?
Junior Investment Analysts typically work long hours and carry out analytical tasks “in the weeds” with financial models. They create and update client documents, as well as perform research to develop sector or industry expertise.
If you enjoy analytical work that produces actionable insights on behalf of clients making lucrative financial decisions, then this job could be a great career path for you. If you enjoy a job where you can preserve a 40-hour work week or need to work in a space with little client-facing interaction, it may be a good idea to consider finance industry roles to determine if they are a better fit.
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