I have noticed that there has been a surge in the number of independent research companies that are mushrooming up in US. In fact it was also the cover story of the recent CFA Institute magazine. Just wanted to take the opinion of AF guys on whether fund managers would be willing to pay hard dollars for independent research speacially for the stocks from the emerging markets such as india? if your answer is yes then please also indicate what price a fund manager would be willing to pay for independent research on such stocks (that may give 30% plus returns) Thanks for you opinion Trycfa
Not really…unless you’re a star analyst with a proven track record.
If you’re trying to get into that business, here’s what you must be able to provide your clients (fund managers): (1) Information and analysis that he can’t find anywhere else (2) Realistically implementable trade ideas (3) A compelling reason to believe that your trade ideas are market beaters. #3 could take the form of a good reputation, a successful track record, or giving free trials of extremely compelling, persuasive, thorough, and correct analysis to build a reputation/trackrecord with a particular manager.
strikershank Wrote: ------------------------------------------------------- > Not really…unless you’re a star analyst with a > proven track record. Correct
strikershank Wrote: ------------------------------------------------------- > Not really…unless you’re a star analyst with a > proven track record. Yea, this seems to be the trend
strikershank Wrote: ------------------------------------------------------- > Not really…unless you’re a star analyst with a > proven track record. Actually having a good sales guy trumps this. As a partner in an indepedent firm I’ve seen a couple of other independent services who had horrible track records (significant underperformance with the vast majority of their calls being wrong) survive and actually thrive for several years simply on the strength of a good sales guy.
RAwannabeCFA, There are always exceptions, and you pointed out one. But if you’re setting up an independent research shop, are you gonna bank on making money by hiring the right sales guy, or the analyst with the proven record? Your example is correct, but it is also an anomoly.
Thanks everyone for the valuable inputs. I agreee that analyst track record as well as good sales guys are both important but what i really want to know is that in emerging markets such as india, very less research is available on the mid cap stocks which can be future large caps, clocking in most of the growth… The big fund manages do invest in such markets but only in large cap stocks and not in such midcaps due to lack of transparency and research… Now if there is an independent research firm, which can bring out good stories from these emerging markets to the fund managers and is professionally managed by a charterholder (there are very few CFA Charterholders in emerging markets… even the big banks hardly have one or two) then do u think that fund managers will be willing to pay for such research?.. if yes then how much?
bump!