Investment analyst

An investment analyst

Description

Investment analysts undertake research to make informed recommendations to fund managers. They research investments globally, but depending on the nature and field of their employer, they can specialise in fields like retail, infrastructure, energy, banking, and financial services. They focus on financial and economic information, such as the political and economic developments that can impact financial markets and the financial performance of the target companies, and use the interpretation of data from different sources to understand how it affects investment decision-making.

Investment analysts typically do the following duties:

  • Conduct thorough research on financial markets, industries, and specific investment opportunities.
  • Analyze financial statements, economic indicators, and market trends to assess investment risks and potential returns.
  • Assist in the management of investment portfolios by recommending buy or sell decisions.
  • Evaluate the risk associated with various investment options and provide risk management strategies.
  • Develop and maintain financial models to forecast investment performance and analyze potential scenarios.
  • Communicate investment recommendations and insights to clients or internal stakeholders.
  • Conduct due diligence on potential investment opportunities, assessing their financial health and viability.
  • Ensure compliance with relevant financial regulations and standards in the investment process.
  • Stay updated on market developments, economic indicators, and changes in investment strategies.

Other titles

The following job titles also refer to investment analyst:

investment operations analyst
investment specialist
portfolio analyst
investment banking business analyst
investment accounting analyst
investment officer
oil and gas investment banking analyst
investment banking analyst
investment compliance analyst

Working conditions

Investment Analysts typically work in financial institutions, investment firms, or asset management companies. The role involves a combination of office work, meetings, and market research. Analysts may need to work long hours during busy periods or when addressing urgent investment decisions.

Minimum qualifications

A bachelor’s degree in finance, economics, or a related field is typically required for Investment Analyst positions. Many analysts also hold advanced degrees such as a Master’s in Business Administration (MBA) or Chartered Financial Analyst (CFA) designation. Strong analytical skills, attention to detail, and proficiency in financial modeling and analysis are crucial. Practical experience gained through internships or entry-level positions in finance is valuable. Continuous learning, staying updated on market trends, and obtaining relevant certifications contribute to the ongoing success of Investment Analysts in the dynamic field of investment management.

ISCO skill level

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

  • the nature of the work performed in an occupation in relation to the characteristic tasks and duties
  • the level of formal education required for competent performance of the tasks and duties involved and
  • the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Investment analyst is a Skill level 4 occupation.

Investment analyst career path

Similar occupations

These occupations, although different, require a lot of knowledge and skills similar to investment analyst.

dividend analyst
securities analyst
corporate investment banker
investment adviser
investment fund management assistant

Essential knowledge and skills

Essential knowledge

This knowledge should be acquired through learning to fulfill the role of investment analyst.

  • Financial products: The different types of instruments that apply to the management of cash flow that are available on the market, such as shares, bonds, options or funds.
  • International trade: The economic practise and study field that addresses the exchange of goods and services across geographic borders. The general theories and schools of thought around the implications of international trade regarding exports, imports, competitivity, GDP, and role of multinational companies.
  • Funding methods: The financial possibilities for funding projects such as the traditional ones, namely loans, venture capital, public or private grants up to alternative methods such as crowdfunding.
  • Securities: The financial instruments traded in financial markets represent both the right of property over the owner and, at the same time, the obligation of payment over the issuer. The aim of securities which is to raise capital and hedge risk in financial markets.
  • Economics: Economic principles and practices, financial and commodity markets, banking and the analysis of financial data.
  • Financial markets: The financial infrastructure that permits trading securities offered by companies and individuals governed by regulatory financial frameworks.
  • Stock market: The market in which shares of publicly held companies are issued and traded.
  • Modern portfolio theory: The theory of finance that attempts to either maximise the profit of an investment equivalent to the risk taken or to reduce the risk for the expected profit of an investment by judiciously choosing the right combination of financial products.
  • Actuarial science: The rules of applying mathematical and statistical techniques to determine potential or existing risks in various industries, such as finance or insurance.

Essential skills and competences

These skills are necessary for the role of investment analyst.

  • Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
  • Review investment portfolios: Meet with clients to review or update an investment portfolio and provide financial advice on investments.
  • Analyse economic trends: Analyse developments in national or international trade, business relations, banking, and developments in public finance and how these factors interact with one another in a given economic context.
  • Provide support in financial calculation: Provide colleagues, clients, or other parties with financial support for complex files or calculations.
  • Obtain financial information: Gather information on securities, market conditions, governmental regulations and the financial situation, goals, and needs of clients or companies.
  • Analyse financial performance of a company: Based on accounts, records, financial statements, and external information of the market, analyse the performance of the company in financial matters to identify improvement actions that could increase profit.
  • Monitor stock market: Observe and analyse the stock market and its trends daily to gather up-to-date information to develop investment strategies.

Optional knowledge and skills

Optional knowledge

This knowledge is sometimes, but not always, required for the role of investment analyst. However, mastering this knowledge allows you to have more opportunities for career development.

  • Banking activities: The broad and continuously growing banking activities and financial products managed by banks ranging from personal banking, corporate banking, investment banking, and private banking up to insurance, foreign exchange trading, commodity trading, trading in equities, futures, and options trading.
  • Financial statements: The set of financial records disclosing a company’s financial position at the end of a set period or of the accounting year. The financial statements consist of five parts: the statement of financial position, the statement of comprehensive income, the statement of changes in equity (SOCE), and the statement of cash flows and notes.
  • International financial reporting standards: The set of accounting standards and rules for companies listed in the stock exchange that are required to publish and disclose their financial statements.
  • Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
  • Business valuation techniques: The processes to evaluate the worth of the company’s assets and the value of the business following techniques such as asset-based approach, business comparison, and past earnings.
  • Corporate social responsibility: The handling or managing business processes responsibly and ethically, considering the economic responsibility toward shareholders as equally important as the responsibility towards environmental and social stakeholders.
  • Credit control processes: The various techniques and procedures applied to ensure that credit is given to suitable customers and that they pay on time.

Optional skills and competences

These skills and competences are sometimes, but not always, required for the role of investment analyst. However, mastering these skills and competences allows you to have more opportunities for career development.

  • Perform stock valuation: Analyse, calculate, and appraise the value of a company’s stock. Use mathematics and logarithms to determine the value in consideration of different variables.
  • Create a financial plan: Develop a financial plan according to financial and client regulations, including an investor profile, financial advice, and negotiation and transaction plans.
  • Interpret financial statements: Read, understand, and interpret financial statements’ key lines and indicators. Extract the most important information from financial statements depending on the needs and integrate this information in developing the department’s plans.
  • Communicate with banking professionals: Communicate with professionals in the banking field to obtain information on a specific financial case or project for personal or business purposes or on behalf of a client.
  • Examine credit ratings: Investigate and look for information on the creditworthiness of companies and corporations provided by credit rating agencies to determine the likelihood of default by the debtor.
  • Budget for financial needs: Observe the status and availability of funds for the smooth running of projects or operations in order to foresee and estimate the quantity of future financial resources.
  • Assess financial viability: Revise and analyse financial information and requirements of projects such as their budget appraisal, expected turnover, and risk assessment for determining the benefits and costs of the project. Assess if the agreement or project will redeem its investment and whether the potential profit is worth the financial risk.
  • Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.

ISCO group and title

2413 – Financial analysts


References
  1. Investment analyst – ESCO
  2. Investment analyst job profile | Prospects.ac.uk
  3. What is an Investment Analyst? | Noble Desktop
  4. Featured image: Image by aholyman from Pixabay
Last updated on December 26, 2023