Alternative Growth


New York—New and innovative approaches to research represent the fastest growing segments of alternative research, as we continue our examination of the formation rates of alternative research providers (ARPs). New research methodologies are the main engine of alternative research growth. Although there are a growing number of alternative research providers in Europe and Asia, the rate of growth in the U.S. remains the highest.

In our previous post we reviewed the Spitzer effect and found that the mini-boom created by the research settlement does not adequately explain the growth of alternative research. Now we turn our attention to the growth in the various types of alternative research and a regional analysis as we look for additional explanations for the growth in alternative research.

Growth by type of research

Integrity’s taxonomy of alternative research has six main categories: fundamental, quantitative, technical, economic, primary and specialized. Fundamental research is classic securities research focused primarily on company level analysis. Quantitative research is model-driven analysis while technical analysis examines patterns in securities market behavior. Economic research is top-down analysis of economies, asset classes and/or markets. Primary research provides investors the ability to do their own primary research on securities. Specialized research includes all the not elsewhere classified providers, ranging from forensic accounting to ESG (aka SRI) to merger arbitrage research.


Using Integrity’s private database of 1700+ research providers, we analyzed the formation of new alternative research providers by decade. By this metric, the fastest growing research segments are fundamental research, specialized research and primary research. Fundamental research benefited from the Spitzer effect, but has demonstrated consistent growth before and after the research settlement, as analysts leave existing firms and set up their own boutiques. Specialized research is growing with the increase in specialized types of research such as forensic accounting, environmental research, patent analysis, and distressed/bankruptcy. Primary research is also growing as expert networks, channel checkers, data mining and search-based research gain popularity.

Growth by Region

Another factor is the global growth in alternative research, which has historically been more of a North American phenomenon. The perception both inside and outside the U.S. is that the U.S. has a large population of alternative research providers because of the ‘Global Research Settlement’ (which was decidedly not global). However, our analysis indicates that alternative research was already a large and growing industry in the U.S. before the settlement, which primarily served to publicize and promote alternative research, at least to retail investors.



As we look at the formation of alternative research providers by region, we see that North America (predominantly the U.S.) is the fastest growing region. Yes, the Spitzer effect is part of the explanation, but by no means the whole story as our analysis by research methodology shows. We are starting to see alternative research growth in Europe and Asia. These charts show the absolute number of research providers formed, so they understate the growth rates in Europe and Asia, which are currently running as high, or higher, than the U.S.


Growth in alternative research cannot be explained away by the Spitzer effect. The growth in new and innovative types of research, epitomized by specialized and primary research, is a key factor in the growth of alternative research, reflecting investors’ greater focus on performing their own primary research and by greater interest in absolute returns. The U.S. remains the ‘hotbed’ of alternative research, but there is a growing alternative research presence in Europe and Asia.



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