Finance

In investment banking, knowing the difference between the sell-side and buy-side industries is essential. But ironically, many of us are unaware of these critical terms. This article will look at the definition of the Sell Side and Buy side, their meaning, and the market players on each side. Sell Side and Buy Side Let us understand what the sell side and the buy side mean. Sell-side in general, the primary thought coming into your mind will be that it is related to selling stuff, right? You are correct. The sell-side sells all sorts of securities, from stocks to bonds to options, on behalf of clients, and they sell it to the buy side. On the buy side, people are looking to invest money on behalf of investors, and they are typically buying securities, so the role of somebody on the buy side versus the sell side is quite different. Let’s look at an example to make it clear. Let’s say Teslas’s looking to create another factory to expand into the electric truck market. To make this factory, they need money, so they’ll get in touch with somebody on the sell side, like an investment bank, to help them raise the money, and the investment banks might propose something like selling Tesla stocks to raise money. The investment bank will then start pitching to the buy side, or the investors, on how exciting Tesla is and why they should invest in let us say the investment bank puts a price tag of $100 per Tesla share. So the buy side will hopefully get excited by this opportunity and decide to invest by buying 250 shares in Tesla. Tesla will receive the money from the investors, i.e., 250 shares*100 dollars = 25000 dollars in exchange for the shares, and for these services, the bank will take a commission to help Tesla raise the money. So, in this example, the buy and sell sides depend on each other; if one of them is not doing well for whatever reason, then the other one is bound to suffer as well. The buy side is about managing clients’ money, where they research how to invest, grow, or mitigate the risk while investing the money. Buy-side While on the other hand, on the sell side, it is about raising money for companies or clients, in this case, by selling things like bonds, stocks, and other securities simultaneously. Another service involves advising clients, so these might be things like mergers and acquisitions. Sell-side Rediscover how firms, buy-side, and sell-side firms work together in the capital markets. For simplicity, the involvement in capital markets is as simple as there are three parties. A party is a company seeking to raise funds by issuing securities. Second, the party with the money and who wants to invest in the company is called the buy side. The seller acts as an intermediary between the buyer and the business, advising on transactions between them. Market Players Let us see who are the market players on each side. Reputable buy-side firms include private equity, hedge funds, mutual funds, exchange-traded funds (ETFs), venture capital, wealth management, and other mutual funds.  The most typical representative of the sell-side is an investment bank. Investment banks act as intermediaries connecting sellers and buyers in the capital markets by providing services to both sellers and buyers. In addition, other sell-side market participants include equity research, sales & trading, commercial banking, stockbrokers, and more. Conclusions Both sell-side and buy-side analysts are tasked with tracking and valuing stocks, but there are many differences between the two jobs. Always read and learn about the things and then take the necessary decisions. I hope this article was useful.

Types of Mutual Funds As an investor, you must be aware of these particular mutual fund schemes because whenever you invest in any mutual fund, you know that it is subject to risk. After all, it is linked to investment in marketable securities. You need to consider your risk appetite, and your investment objective, and you must be aware of all the types of mutual funds so that you can choose the appropriate one as per your demand and your investment goal. Types of Mutual Funds based on Structure: Open-ended Fund Investors may enter or depart open-ended schemes anytime, even after the NFO. When an AMC, or Asset Management Company, launches a new mutual fund scheme open to investor subscription, that period is known as the new fund offer period. AMCs can be any bank or financial organization. You can invest in a new mutual fund scheme within that period, but you can still enter or exit that particular scheme at any moment if you still wish to do so after that term has passed. It is called an “open-ended fund” because of this. The open-end plan continues to operate with the remaining investors, notwithstanding the possibility that some unit holders will withdraw all or part of their holdings. There will be numerous investors in one specific mutual fund plan. These investors’ money will be placed in that typical mutual fund scheme. Even if some investors have sold their mutual fund schemes and redeemed them, or if they went for redemption, those mutual fund teams will still be able to operate. These funds are referred to as open-ended funds because there is no set deadline by which they must be closed. Close-ended fund The maturity of closed-end funds is set. Only during the NFO can investors purchase units of a closed-end scheme from the fund. We discovered that open-ended funds allowed investors to buy or sell mutual fund units even after the NFO, but close-ended funds only allow this during the NFO. When a new fund scheme (NFO) enters the market, it is initially available for mutual fund scheme acquisition or sale; however, after that, these close-end schemes are terminated and listed on the stock exchange. If you own a closed-end fund and wish to redeem your investment, subscribe to a specific plan, or buy or sell a mutual fund scheme, you must go to the stock exchange and conduct your trading there. Closed-ended funds are, therefore, only accessible during the NFO or the new fund offer period, after which it becomes listed on the stock exchange. If investors are available, you can trade as an investor by buying and selling if the fund is listed on one or more stock exchanges, which is required for close-ended schemes. Because you cannot buy or sell from a mutual fund scheme once they close, listing these funds on stock exchanges is required. A platform where trading may take place becomes essential, which is why it is listed on the stock exchange, where you can easily trade where you can, buy or sell your mutual fund units, the units of closed-end funds that you own. Interval fund The advantages of both open-end and close-end funds are combined in interval funds. They are primarily close-end but may switch to open-end. The interval period between two consecutive transaction periods, or when the fund closes and reopens for buy and sell, is known as the interval period. The minimum interval period length is 15. Therefore it will remain closed for 15 days. The interval period is not a time for subscription and redemption. When a mutual fund scheme is closed or during the interim period, you cannot purchase or sell any units of the mutual fund scheme. Because of this, you must wait until the moment when it will once again become the open end for a set amount of time before you can sell your scheme or purchase any new plan. Types of Mutual Funds based on Asset Class: Equity Fund The fund that invests in equities and equity-related instruments is called an equity fund. Your investment will consist of more than 65% equity instruments. Examples include small-, mid-, and large-cap equity funds, which invest in company shares based on market capitalization. Therefore, whenever you hear the terms “small cap fund,” “mid-cap fund,” or “big cap funds,” you should know that these terms refer to funds that invest in firms with correspondingly small, medium, and large market capitalizations. The market capitalization of a publicly traded company is determined by multiplying the total number of shares by the share price. As a result of the higher risk associated with these funds compared to other, safer instruments, investors also expect more significant returns. Diversified equity funds, targeted equity funds, and sector funds are a few different types of equity funds. Debt fund A debt fund is a fund that invests in debt and securities that are related to debt. As a result, a large majority of the investment amount—more than 65 per cent—will be invested in debt and instruments associated with debt. When compared to equities, debt instruments are safer, less risky, and hence have lower returns. Liquid funds, money market funds, overnight funds, short-term funds, bond funds, guilt funds, etc., are a few of the debt schemes. A brief introduction to liquid funds and open-ended liquid schemes is that they invest in debt and money market assets with maturities of up to 91 days. Overnight fund schemes invest in short-term securities with a one-day maturity. Government securities are a significant investment of guilt funds. These funds have an average return and are for shorter durations in safer instruments. Hybrid fund Hybrid funds invest in a blend of equity and debt instrument. Some people prefer to strike a balance between the two; they don’t want to take on more risk and settle for lower returns, so they choose a balanced fund. One of them is the hybrid fund. In both asset groups, there is a proportionate

MUTUAL FUNDS “MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL SCHEME-RELATED DOCUMENTS CAREFULLY.” The above is a universal term; everyone must have seen this while reading something or listening to the radio and television. Every month when your salary is credited, you set aside a portion of your pay for savings. Savings can be used later for emergencies or if you want to buy a house, car, or any required thing. There are many ways to save money. A straightforward method is keeping your salary in the bank account, which gets collected. This is not the right way, as money loses its value as time passes due to inflation. Inflation is increasing in our country, and the process of commodities is rising too. Consequently, according to the inflation rate, your money’s worth drops every year by 4%-5%. People invest the money so they don’t lose value. Investment can be defined as the application of money to earn more. Investment also means savings or savings made through delayed consumption, i.e., the acquisition of commodities that will be used to create wealth in the future but are not consumed today. There are different types of Investment, and our country has mainly five places for Investment. Any investment includes three essential things. Therefore, the main risk in this situation is that the return will also increase as time increases, as would the risk. You will need to take on greater risk and invest for a longer duration if you want a higher return on your Investment. Savings accounts have the least amount of risk and have no restrictions. Anytime is a good time to save or withdraw money. And since our inflation rate has been between 4% and 5% over the past few years, the return we receive here is substantially lower, coming in at about 4%. Another less hazardous choice is a fixed deposit, but there is a time limit before we cannot withdraw the funds. Therefore the return is likewise 7-8%. These days, buying gold and jewellery carries significant risks due to the vast price fluctuations. Real estate and property investments are low to moderately risky. A large amount of capital to invest—between lakhs and crores of rupees—is one of the drawbacks of buying real estate. It requires a lot of money. You can make significant gains on the stock market but also suffer large losses. The stock you choose to invest in will determine the level of risk involved. You must be well-versed in both stock market operations and store performance. So, these are the few types of investments that are widely used. But there are other types, too, such as Government bonds, Corporate bonds, Cryptocurrency and Bitcoins, and many more. A bit of well-known general advice is to never invest your money only in one place. We should diversify our investments so that you won’t be responsible for the total loss in the event of a crash. There is a much lower likelihood of everything collapsing, including the price of gold, real estate, and even the stock market. There’s a good chance that if one thing happens, you’ll also profit from the other. You need to invest in several locations; this is known as diversification. One such tactic in the current world is investing in mutual funds. A mutual fund is a special kind of Investment that enables you to combine your funds across many asset classes. A mutual fund’s past The Indian mutual fund market officially began in 1963 with the founding of the Unit Trust of India. The public and private sectors now equally participate in this industry, which used to be dominated by UTIs. According to international standards, the Indian mutual fund industry is still relatively modest. Understanding how mutual funds operate is crucial because the total amount of money managed by the sector increased from $10 trillion in 2014 to $20 trillion in 2017, doubling in three years. Let us understand this simple example: Okay, let’s say I had to travel from Mumbai to Pune.I have two choices. That is precisely the difference between a stock market investment and a mutual fund investment.In the stock market, you make your own decisions, whereas, in a mutual fund, you hire a professional or expert in this field, and he makes decisions for you. Mutual fund management decides what to do with the money invested in the mutual fund. There are many types of mutual funds, accordingly, you can invest in any of these depending on your suitability. Asset Management Company (AMC) starts mutual funds. You give your money to an asset management company and support all the money collectively at different places. The return rate they get collectively from these other places is that some small per cent of 1-2% is kept as a profit by the Asset Company, and the rest you get back as per that return rate. ICICI, TATA, Reliance, HSBC, and Aditya Birla are a few examples of companies and banks that have started their Asset Management Companies. All the companies start different kinds of mutual funds in large numbers. For instance, ICICI began to have more than 1200 mutual funds.So, how risky are your mutual funds, and the return depends on the mutual funds you are investing in? Let’s examine the operation and purpose of a mutual fund. Individuals like you and I will raise money for the mutual fund. Assume that a group of 100 individuals donate money or make contributions to mutual funds. This mutual fund will put the money back into investments like equities mutual funds, joint debt funds, and other similar options. In turn, mutual funds will generate income, which may come from dividends or interest. Let’s say mutual funds made 500 rupees; in this case, they would disperse the money to the investors who had put money into the fund. However, it’s vital to note that they won’t transfer the entire 500 rupees; instead, they’ll keep a piece of it as a commission. The