SINGAPORE: Two high-profile bankers in Asia recently made the switch from sell-side to buy-side, which leads to the question: which is the better choice for a career in finance?
Joel Wee, who was a director at Deutsche Bank for six years, left last month to join Singapore-based hedge fund Pilgrim Partners Asia as a portfolio manager. Mamiko Kamimura, who had been with Goldman Sachs since 2008 and served as an executive director since 2020, also left in September and is now with private equity fund HIG Capital in Hong Kong.
First of all, what is a buy-side? It’s the part of financial markets composed of investing institutions that buy securities for money-management purposes. As its name suggests, the sell-side is on the opposite end, offering investment banking, sales, and trading services to institutional and individual clients.
The buy-side includes investment managers, pension funds, and hedge funds and the sell-side comprises investment banks, advisory firms, and corporations, among others. Some prime examples of buy-side firms include BlackRock, Allianz, JP Morgan Asset Management, The Vanguard Group, UBS, and PIMCO, while JP Morgan Chase, Goldman Sachs, Deutsche Bank, and Morgan Stanley are among the more well-known examples of sell-side firms.
But what would cause individuals from such established sell-side firms to jump ship and join smaller and less-known buy-side firms?
“It might not be that surprising that top bankers are leaving for the buy-side. Hedge funds and private equity funds offer significantly better work-life balance than banks do – and what’s more, they tend to pay (seniors) a lot better on account of PnL sharing and carried interest, respectively,” writes Zeno Toulon in the efinancialcareers site.
So which side is the better one? The answer may depend on one’s skills and interests, after all. First, someone looking at a career on either side must have some skills in the following areas: industry research, financial modelling, Excel skills, and research report generation. But those who are interested in joining the buy-side must be skilled as well in raising capital and achieving targeted rates of risk-adjusted return. At the same time, those who wish to explore a career on the sell-side should be good at pitchbook presentations, client relationship management, winning new business, and selling and closing deals.
Finally, it will boil down to the role that you want for yourself in a career in finance. The buy-side offer jobs in portfolio management, wealth management, private equity, venture capital, and hedge funds, while on the sell-side, there are jobs in commercial and corporate banking, equity research, investment banking, and sales and trading.
/TISG