EUROPE - Asset managers have failed to improve their performance despite massive spending on research, management consultant McKinsey claims.
The firm said average large European asset managers invested £45m (E64m) – equivalent to one basis point of assets under management – on in-house equity research.
Small asset managers spent around three basis points of assets under management – approximately £4.8m – on research.
But McKinsey said these spends were not improving performance and asset managers must take action to extract greater value from existing research resources.
The report says increased research spending is failing to translate into better performance because:
- Researchers fail to add value over and above “sell-side” research. - Research may lack focus or portfolio managers may fail to act on it quickly enough. - It is difficult to find new insights in efficient highly-researched markets like the US or UK.
McKinsey director, Andrew Doman, said: “In recent years there had been a competitive ‘arms race’ in research both on the buy and sell-side.”
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers