New York, NY – A few weeks ago, Institutional Investor magazine released its 2011 All American Research Team. As part of II’s survey of 3,500 analysts and portfolio managers at 1,000 asset management firms, buy-side investors were asked what the most important attributes of the research product was to them. The following blog reviews the results of this year’s survey.
The table below reveals how the buy-side analysts and portfolio managers rank various attributes of the research service. As you can see, most factors in the 2011 survey were ranked in a similar fashion to the 2010 survey with “Integrity / Professionalism”, “Industry Knowledge”, and “Accessibility / Responsiveness” being the top three attributes in both of the last two years. We suspect that the slightly higher rating for “Integrity / Professionalism” this year might be a result of the ongoing federal insider trading investigation where over 50 corporate executives, hedge fund analysts, and employees of Primary Global Research have either pled guilty or been found guilty of insider trading.
|
ATTRIBUTE |
2011 |
2010 |
| Integrity / professionalism |
1 |
2 |
| Industry knowledge |
2 |
1 |
| Accessibility / responsiveness |
3 |
3 |
| Special services (company visits, conferences, etc.) |
4 |
4 |
|
Written reports |
5 |
5 |
|
Management access (one-to-one) |
6 |
7 |
|
Useful / timely calls and visits |
7 |
8 |
| Local market knowledge / country knowledge |
8 |
6 |
|
Financial models |
9 |
9 |
| Idea generation |
10 |
10 |
|
Research delivery (entitlement, technology & customization of buy-side needs) |
11 |
11 |
| Earnings estimates |
12 |
12 |
Source: 2011 Institutional Investor Survey
Company visits, conferences and management access remains relatively important to the buy-side, ranking 4th and 6th in the 2011 survey, compared to a 4th and 7th ranking in 2010. Written research reports remained steady in 5th place in both 2010 and 2011.
The only factor that changed substantially in 2011 was “Local Market Knowledge / Country Knowledge” which fell from 6th place in 2010 to 8th place in 2011. This is likely due to the fact that buy-side investors were quite reliant on local market knowledge in 2009 and 2010 following the plunge and subsequent rally that took place in the emerging markets in 2008 and 2009. However, the emerging markets remained relatively stable in 2010 and the first half of 2011.
“Financial Models”, “Idea Generation”, “Research Delivery”, and “Earnings Estimates” all remained unchanged with a 9th, 10th, 11th and 12th place rankings in both 2010 and 2011.
SUMMARY
So overall, buy-side investors believe that integrity, industry knowledge, and responsiveness are some of the most highly valued aspects of the research product. In addition, company visits, conferences, management access, and traditional research reports are also highly valued by the institutional investor community. Unfortunately, this is not terribly different from past years, nor does it give us much of a hint about how much clients are willing to pay for various aspects of the research service. Consequently, research providers will need to keep focusing their efforts on providing high quality, unique, and insightful research that enables investors to make profitable investment decisions. In addition, they will need to continue to justify to clients the value they bring to the buy-side research process.