New York – According to a recent survey of 123 US-based hedge funds and mutual funds, approximately a third of all money managers use third-party channel checking services to augment their internal research capabilities. Overall, hedge funds use third-party channel checking services more than mutual funds, though large mutual funds (defined as those with AUM in excess of US $10 billion) have usage rates that are roughly on par with large hedge funds (defined as those with AUM in excess of US $1.5 billion).
Third-party channel checking services help investors obtain unique, proprietary and timely insights that can be actionable. They can be effective, but the can also be expensive, especially if they are used as a tool for regularly monitoring companies. Given the high costs of commissioning recurring channel checks, small hedge funds and mutual funds, which have fewer resources to spend on external research inputs, tend to do channel checking work themselves.