Equity Research Overview

The equity research function of an asset management firm provides in-depth analysis and recommendations on individual stocks and sectors to the firm’s portfolio managers. The research team's goal is to provide information and analysis needed to make informed investment decisions and help portfolio managers generate alpha for their clients. This includes conducting in-depth research on individual stocks and markets, as well as developing and maintaining equity models and tools to aid investment decisions.

The Equity Research team consists of a team of experienced investment professionals with a variety of skills and expertise and may have backgrounds in economics, finance, mathematics, and computer science.

The Equity Research team of an asset management company typically performs the following tasks:


  • Analyze company’s financial statements: Equity research analysts review a company’s financial statements to assess its financial performance and competitive position. They may also look at historical financial data to identify trends and patterns.
  • Develop and maintain a Financial Model: Develop a detailed financial model based on the company’s historical financial statements and future forecasts based on assumptions.
  • Conduct industry research: Equity research analysts also conduct industry research to understand the trends and dynamics of the industries that they cover. This may involve reviewing industry reports, news articles, and government data.
  • Analyze economic data and market trends: Macroeconomic parameters such as GDP growth, inflation, unemployment, and interest rates have a significant impact on the performance of equity markets and research analysts track these parameters to better understand the risks and opportunities associated with investing in equity markets.
  • Meet with company management and industry experts: Equity research analysts often meet with company management and industry experts to get a better understanding of the company's business strategy, industry dynamics, competitive landscape, and prospects.
  • Author research reports: Equity research analysts write reports summarizing their findings and recommendations. These reports are used by the firm's portfolio managers to make investment decisions.


Equity Research on the buy side is primarily conducted for the consumption of:


  • Boutique asset managers: Boutique asset management firms are small, independent investment firms that specialize in a particular asset class, or investment strategy. They have smaller teams compared to large asset managers.
  • Hedge funds: Hedge funds are pooled investment funds invested to trade on a wide range of assets using a variety of strategies to generate high returns.
  • Institutional asset managers: Institutional asset managers manage money for institutional investors, such as pension funds, endowments, foundations, and insurance companies.
  • Family offices: Family offices provide financial and wealth management services to wealthy families and typically serve ultra-high-net-worth individuals and families (UHNIs).


Change in the industry landscape has led asset managers to revamp their operating models with a focus on cost optimization, quick turn-around, differentiated insights, and efficiency gains. Equity research teams face several constraints and requirements, including:


  • Cost: Equity research can be expensive, especially for small and medium-sized asset management firms.
  • Time: Equity research teams often have limited time to research companies and industries with ever-increasing companies in their portfolio coverages.
  • Complexity: The equity research process is becoming increasingly complex, due to the globalization of financial markets, the increasing sophistication of investment strategies, and the growing regulatory burden.
  • Expertise: Equity research teams require a high level of expertise in financial analysis, industry research, and company valuation.
  • Independence: Equity research teams must be independent of the asset management firm's trading desk and portfolio managers to ensure that their research is unbiased.
  • Compliance: Equity research teams must comply with all applicable regulations.
  • Competition: The equity research industry is highly competitive with several insights provided on the same companies by many firms and hence there is a high demand for differentiated research.


Investment research teams are managing these challenges in several ways, including:


  • Focusing on high-value research. Equity research teams are increasingly directing their resources on research that is likely to generate alpha for their clients. This involves developing proprietary research models, conducting in-depth company analysis, or investing in new technologies such as artificial intelligence and machine learning.
  • Increased Collaboration within their firms. Further, research teams are collaborating with other teams, such as portfolio management and trading desk, within their asset management firms to ensure that the research is relevant to the investment needs of the firm and its clients.
  • Offshoring research. Equity research teams are increasingly partnering with external research providers for various activities, such as financial models, research reports, newsletters, and database services. This helps them to free up resources so that the team can focus on high-value research.


In the future, equity research teams will need to continue to adapt to the changing landscape of the asset management industry. This may involve focusing on new areas of research and adopting to new technologies. Here are some specific things that research teams can do in the future to address the challenges they are facing:


  • Invest in new technologies. Generative artificial intelligence, machine learning, and other new technologies that can help investment research teams to be more efficient and to produce higher-quality research.
  • Collaborate with other teams. Potential benefit from collaborating with external research providers on value added tasks that are recurring in nature.
  • Focus on new areas of research. New areas of research, such as ESG investing and alternative assets, which are becoming increasingly important to investors.
  • Adopt new ways of working. Consider adopting new ways of working, such as agile development and offshore research work. This can help them to be more efficient and to produce higher-quality research.

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