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Capital Markets

Fund managers and equity research: Wanting more for less

Independent research firms feel the squeeze as fund managers consume more but spend less.

Jay Bennett, Greenwich Associates 

"From the perspective of independent and boutique research providers, the fact that their commission intake did not grow over the past 12 months during buoyant markets raises some troubling questions"
Jay Bennett, Greenwich Associates

Like Hollywood celebrities, US fund managers are used to getting lots of things for free, such as equity research. Although they are now expected to justify their conspicuous consumption, it seems that the sense of entitlement is hard to shake. Fund management firms are ramping up their use of independent research but, according to a new study from Greenwich Associates, these institutions are not increasing the amount of commission dollars they pay to independent research providers. "When looked at in light of the increasing usage reported by buy-side analysts, we have to wonder if some non-broker/dealer independent research providers are having trouble getting paid for their products," says Greenwich Associates consultant Jay Bennett.

Less commission

Forty percent of the more than 1,000 buy-side equity analysts interviewed by Greenwich Associates, as part of its 2007 US Equity Analysts Research Study, say they expect to increase their use of products and services from independent or boutique research providers in the next 12 months.

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