Buy-Side Spending on Investment Research Expected to Fall in 2021


According to Integrity Research’s annual research industry outlook, spending by global asset managers on sell-side and independent research is expected to fall 4.5% in 2021 – marking a modest reversal of the jump in investment research spending seen during the pandemic.

Integrity 2021 Research Industry Outlook

Buy-side spending on sell-side and independent investment research is expected to fall 4.5% to $13.66 bln in 2021, according to Integrity Research’s annual Investment Research Industry Outlook.  This represents a 19.6% decline in annual research expenditures from the peak spending level of $19.98 bln seen in 2015.

While many European firms are expected to continue limiting their spending on research in response to MiFID II, US asset managers will also spend less on research in 2021 as firms reduce their spending in 2021 following the surge in equity commissions and bundled commission payments for sell-side and independent research seen in 2020.  According to our forecast, research spending in Europe should drop 5.4%, spending in North America will fall 4.8%, and research spending in Asia is expected to fall 2.8% in 2021.

Spending on sell-side research is expected to drop $578 mln or 4.8% in 2021 from $12.10 bln to $11.52 bln.  The region we expected will record the greatest weakness in 2021 is Europe where research spending will fall 5.4% as most asset managers continue to fund research from their P&Ls.  US asset managers will decrease their research spending by 4.8% in the wake of the surge in bundled research payments seen in 2020.  Spending on sell-side research is expected to slip 2.8% in Asia in 2021.

Buy-side expenditures on independent research is expected to fall 3.1% to $2.1 bln in 2021.  Spending in North America should drop 4.0%, while spending in Europe is expected to fall 2.0% and Asian expenditures should dip 1.0%.  We project that spending on independent fundamental research will rise 0.4% in 2021 while spending on macroeconomic research from IRPs will drop 14.4%.  It is interesting to note that buy-side spending on primary research – particularly from expert networks – is projected to actually increase 6.7% in 2021.  This is due in large part to the fact that asset managers cannot obtain this type of research from their sell-side counterparts.

While the bulk of the $13.66 bln that asset managers spend on investment research is spent to pay for fundamental research (a majority of what they pay to the sell-side is for this type of research), institutional investors now spend more on primary research from IRPs ($933 mln) than any other type of research they obtain from independent firms.

Is the Bottom In Sight?

The big question we are continually asked is whether the research industry has finally bottomed, or do we expect continued deterioration?  The answer is “It depends”.  We expect to see asset managers continue to spend less and less for non-differentiated “me too” research.  This is particularly the case as a growing number of asset managers are spending their own funds for sell-side and independent research.

However, we do believe that the market opportunity for innovative firms is actually growing.  We have seen many buy-side firms increase their spending on unique third-party research and data products including ESG research, ETF research, research on under covered companies, AI data driven insights, and various alternative datasets.  This has driven an increasing number of sell-side and independent research firms into these areas.

In addition, we have seen a growing number of research and alternative data firms look to expand their businesses by looking for clients outside the traditional buy-side.  Many macro and policy research firms, expert networks, channel checkers, and alternative data firms have increased their focus on serving corporate customers, PE firms, and even strategy consultants, in addition to their hedge fund and mutual fund clients.

Consequently, we expect that the market for investment insights is likely to expand in the years ahead.  However, we doubt that this industry will look very much like the research industry we saw 10 years ago.  Instead, we suspect that the firms that innovate their products, expand their client bases, and enhance their expertise are the ones who are likely to win.


About Author

Mike Mayhew is one of the leading experts on the investment research industry. In addition to founding Integrity Research, Mike is on the board of directors of Investorside Research Association, the non-profit trade association for the independent research industry, and a frequent speaker on research industry trends and developments. Mike has over thirty years of research industry experience. Email:

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