At Substantive our tagline is “Source Quality, Save Money” – we ensure that portfolio managers don’t miss the best research, and provide data-driven insight into how research providers compare. We don’t broke research or charge providers.
Asset managers can subscribe to two main products:
- Thematic Research Monitoring. We keep the investment function aware of everything outside their core research provider list with a weekly monitoring service matched to individual portfolio managers’ investment processes. Understanding consensus in specific trades and themes will be difficult in 2019, whilst the most contrarian publication may not even be accessible for a PM.
- Value/Price Benchmarking. We keep the procurement function aware of the best matched analysts and providers for their firm’s specific needs. With greater scrutiny on the research budget understanding more suitable or cheaper alternatives is the only way to get value for money.
Research flow from 350+ bank and independent research providers, plus an experienced editorial team and proprietary custom-built A.I. allow us to provide clients with a unique perspective on quality, suitability, value and coverage.
Bloomberg: Analyst Jobs Vanish as a Perfect Storm Crashes Into Research
Integrity Research Associates: Research Unbundling Conference a Resounding Success
Bloomberg: Analysts Make Research Cooler, Wonkier and Bespoke to Lure Cash
Fundfire: SEC MiFID Stance Could Bring Implementation Challenges for Managers
Integrity Research Associates: Assessing MiFID II’s Impact in the US
Financial News: Fund managers preparing to get pickier about the market insights they acquire under Mifid II
Investment Week: Asset Manager Code of Conduct Unveiled
Integrity Research Associates: Substantive Research Develops Methodology for Ranking Research
Euromoney Magazine: Counting the Cost of Research
Finextra: RSRCHXchange connects with Substantive Research Daily Briefings
January 2020 – time to digest how 2019 negotiations went, and watch the US carefully..
Asset managers’ have had 2 years to assess their responses to MiFID II and research unbundling rules. For much of the market that means the focus moves from valuing research for compliance purposes to ROI in terms of alpha and asset gathering. Asset managers have now negotiated research prices for the first time with some understanding of what they used and valued most and least. Last year the savings came from cutting the provider list, this year there will have been adversarial conversations with core providers in order to save money where possible.
Prices and budgets have moved lower again in 2020, and we will learn where the greatest disparities between sellside pricing and buyside perception of value exist. Many buyside firms’ ex post valuations have been materially lower than the banks’ expectations – how long will they subsidise this business if the money coming in is even lower than their modest projections? Does quality win out, or do we lose a large number of the best analysts as the market takes time to clear efficiently?
Does the shift to P&L funding for research gain momentum in the US? Some firms have taken the decision that P&L funding is inevitable so why not begin now? However, the majority of the market is treading water, aided by the general impression that the SEC would be happy with transparency for end investors without necessarily research costs having to be taken in house. Many firms are getting “P&L ready” however, in order to not have a big step change should they have to move quickly. This all creates churn and uncertainty.
In the end, the decision by US asset managers to go P&L in the mid to long term will be dominated by whether a significant portion of clients force the issue. Either way rigour in research procurement is paramount, whether scrutiny comes from the regulator, the end investor or the asset managers’ CFOs.