With investing becoming increasingly accessible, research from top firms has proven instrumental in guiding asset managers’ investment decisions. As buy-side clients seek alpha-generating ideas, sell-side equity research teams strive to provide insightful, differentiated analysis. However, not all research firms are created equal. Objective research ranking frameworks from third parties like Institutional Investor help discern truly elite analysts and firms. Retaining premier sell-side partners enhances idea generation and ultimately investment performance. This article will explore leading third party research rankings, examine hallmarks of top research, and advise on effectively utilizing research relationships.
Institutional Investor dominates sell-side research rankings, cementing top firms like Goldman Sachs and Morgan Stanley
Institutional Investor’s annual All-America Research Team surveys are the gold standard in evaluating sell-side equity research. Their comprehensive buy-side polling determines the top analysts and firms covering each sector. Goldman Sachs and Morgan Stanley consistently claim top research firm honors, underpinned by individual analyst excellence across sectors. Meanwhile, independent boutiques like Sanford Bernstein also thrive, leveraging specialist expertise. Although rankings feature some reshuffling year-to-year, the leaders tend to dominate in terms of coverage breadth, idea generation and client mindshare.
Blending quantitative models and qualitative judgment, top research provides unique, predictive insights
Great equity research combines both art and science. Leading research teams harness advanced data analytics like natural language processing of earnings call transcripts and machine learning techniques. However, human discernment remains critical, as top analysts can interpret subtle executive commentary clues and industry feedback. A rare blend of quantitative rigor and qualitative nuance empowers elite research teams to make discerning predictions on future fundamentals. Their informed judgments steer clients toward compelling long and short ideas.
Customizing service delivery and tailoring insights boosts research relevance for clients
Although sell-side equity research caters to diverse buy-side clients, one-size-fits-all analysis fails to maximize value. Top research teams personalize and customize service for individual investors based on specific needs. For example, a quantitative fund desires granular analytics and differentiated datasets to feed models, while a fundamental PM wants succinct written notes distilling key themes. Beyond content, coverage cadence and communication modes adapt to align with client workflows. Research groups that understand specific client processes and objectives provide the most useful insights.
Objective third party evaluations and buy-side feedback should guide selecting and managing research relationships
Given the proliferation of sell-side research, buy-side firms must be discerning when choosing partners. Independent research assessments highlight consistent top performers and rising stars deserving of mindshare. Beyond rankings, buy-side PMs and analysts should track idea relevance, assessing research-driven investment outcomes both long and short. Providing usage statistics and candid qualitative feedback helps research teams sharpen focus and optimize service. Investment firms that actively curate and cultivate a select research network boost their probability of identifying money-making opportunities.
Institutional Investor rankings offer an invaluable starting point for identifying elite research teams with differentiated insights. However, ongoing measurement of idea generation and calibration of service levels based on internal priorities enables buy-side firms to maximize research relationships. Top investment research combines insightful perspectives with tailored service relevant to specific investment processes.