As much as 90 per cent of institutional research is being conducted in-house, with reliance on investment banks falling rapidly, according to new research by Thomson Reuters.
In a new report titled Seismic Shifts: The Future of Investment Research, Thomson Reuters and Greenwich Associates interviewed 30 chief investment officers, portfolio managers and investment analysts to gauge the direction of investment market research.
The report found that nine out of 10 institutional investors are using proprietary in-house analysis as their primary input to the research process.
As many as 50 per cent of respondents said they expected to decrease their use of sell-side (ie, investment bank) research.
At the same time, 43 per cent expected to further increase their reliance on in-house research – and 39 per cent anticipated being more reliant on independent research providers.
Artificial intelligence (AI) is also coming on the radar of institutional investors, with 56 per cent saying they expect to integrate the new technology within their investment process.
Thomson Reuters global head of portfolio management and research Mahesh Narayan said: "It seems clear that the investment research landscape will look very different in the next five to 10 years."
"Investors will likely need to obtain more data and information to feed new AI and machine learning technology they invest in, including alternative data to identify new ways of finding alpha," Mr Narayan said.
"We expect active portfolio managers will also be looking less to the sell-side for their research with a greater reliance on internal research and vendors to supply the information and tools they need," he said.
A new survey has found around 90 per cent of institutional investors believe pension funds, insurers, family offices and sovereign wealth fu...