Nick Anderson, Head of Equity Research, Henderson Global Investors said that there is more price discovery and transparency today than there was three years ago and that more independent research providers are setting benchmarks. Anderson said that research was an input into their decision-making process and that ultimately, they have to work out how best to allocate their time and resources to determining the best inputs.
He went on to say that external research has an enormous part to play because of the economies of scale. Asset managers like Henderson Global Advisors can delve into experts in all areas of the markets; it is near impossible for fund managers to replicate that level of expertise in-house.
One potentially interesting consequence of cost is that those managers who can integrate their approach to selecting the best research providers, with a proven ability to improve a fund’s performance at the best price, into their overall marketing strategy could differentiate themselves from the crowd in future.
Another question polled at the Bloomberg event asked whether there was a risk that the choice of asset managers would increase, stay the same, or decrease.
The research landscape is undoubtedly changing under MiFID II. Opinions are divided on how cost will impact smaller managers, but one thing that needs to happen is for common sense to prevail among regulators. Research, at the end of the day, is one of several inputs that contribute to performance. Managers will still need to be judged on outcomes, not on how effectively they spend their research dollars.
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