image: Cameron Costa / CNBC

US asset managers shake up equity research as banks shrink their budgets

February 5, 2018


As new rules spur Wall Street banks to further shrink their research budgets, U.S. asset management firms are shoring up in-house research, and reinventing the stockpicking business in the process.

Fund managers are eschewing the traditional model of teams built to cover a broad range of industries, instead picking areas of expertise and hiring analysts with very specialized knowledge and often non-Wall Street backgrounds.

The European Union’s MiFID II regulations that target conflicts of interest and took effect in January require asset managers to separately report trading commissions and investment-research payments. In the past, banks bundled research with trading fees covered by investors rather than fund management firms.

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