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.”
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