Research Will Remain Critical for Buyside, Woodbine Says

Despite the raging debate in Europe over bundling and anticipated legislative change, the use of broker proprietary and independent research will not significantly decline.

That’s the view of Woodbine Associates, who in their latest report also added that most service providers claim “corporate access” is the paramount service demand among asset managers. That may (or may not) be representative of the market at large, according to Matt Samelon, director of equities at Woodbine.

The consultancy’s latest report, “Research Services: Value and Opportunity Among Asset Managers in the U.S. Equity Market,” identified the value attributed to particular research services and delivery channels by asset managers and illustrates the importance of various professionals in influencing spending.

Woodbine reported that service demands vary considerably at the market segment level. Notable differences in the value attributed to various services and the channels by which asset managers prefer to acquire broker proprietary and third-party intelligence exist at the market segment level. Large, medium, and small firms consume research differently and the influence of professionals in spending decisions differ as well.

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“Research encompasses multiple services. In fact, no fewer than eight major offerings are actively used by asset managers across the industry,” said Samelson.

Samelson added that among the report’s findings, three stood out: demand by market segment, based on asset manager equity AUM, differs considerably; key individuals influencing how and where research dollars are spent also vary and; providers looking to supply research with a “one size fits all” model are squandering resources.

Woodbine’s survey sample is comprised of 49 asset managers, almost entirely investment advisors and pension funds. Most employ fundamental and/or quantitative investment strategies. These firms range in size from US$1 Billion Equity AUM to more than US$100 Billion Equity AUM. The sample is representative and reflects almost 20% of the aggregate commission spend by such firms in the market. Respondents were almost exclusively head traders at these organizations.