Financial analysts can be divided into different specializations, two of which are equity and investment analysts. The job duties, educational requirements and career advancement prospects of equity analysts and investment analysts are similar, but the two job roles are different. Understanding the difference between an equity analyst and an investment analyst is important for anyone considering a career in financial analysis.
Equity Analyst Responsibilities
Equity analysts research and report on the fundamental strength of companies in the securities market. This can include disseminating financial statements and the contents of quarterly earnings calls, analyzing previous technical trends in the market values of securities, analyzing the soundness of business models and interviewing company executives. Equity analysts distill large amounts of data into reports and recommendations about specific companies at different times.
Buy-Side vs. Sell-Side Equity Analysts
Equity analysts can work on either the buy or sell side of the market. On the buy side, equity analysts can work for mutual funds and financial advisory firms, providing research and recommendations to fund managers. On the sell side, they can work for investment banks, researching companies that wish to launch an initial public offering to ascertain the likelihood of success and profitability for the bank underwriting the sale.
Investment Analyst Responsibilities
Investment analysts take a more strategic, big-picture approach to their research. Rather than focusing on individual equity securities, investment analysts begin with top-level analysis of global economics and industry trends. Using big-picture data, investment analysts drill down into specific industries to identify opportunities for profitable investments in different segments, finally identifying and researching individual investment options much the same as equity analysts do. Investment analysts are concerned with matching an entire portfolio's assets with investors' objectives and needs, allocating a mix of stocks, bonds, real estate investments and other financial instruments as needed, based on their research.
According to the Bureau of Labor Statistics, financial analysts require at least a bachelor's degree to obtain an entry-level position leading up to a financial analyst job, but many employers require a master's degree in finance or economics. Any sell-side equity analysts working directly with investors are required to carry an active license from the Financial Industry Regulatory Authority, but licensing regulations are less stringent for analysts who only create internal reports for portfolio managers. A track record of profitable investments and accurate analysis can help would-be analysts stand out from those with no real-world experience.
Equity analysts can work their way up to fund management positions, setting the strategic direction for their funds and managing a team of other equity analysts. Investment analysts can work their way into portfolio management positions, making buy and sell decisions for a diversified portfolio of multiple investment types. Successful and experienced fund and portfolio managers can write books and speak at industry events to further develop their careers.
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