Research evaluation report: Sell-side performance under Covid-19
Covid-19 has significantly affected the financial markets and shaken up the $13.8 bn investment research industry. Research volume has surged by 240% in response to Coronavirus threat. Research are publishing more content to help their clients navigate their paths through the increased volatility and uncertainty. Have they been successful?
To investigate the efficacy of investment research during this pandemic, we created model portfolios based on recommendations from over 150 brokers with US coverage. We also created a novel Invisage Sentiment score based on signals from RavenPack – a big data analytics firm. The period of analysis was 01 Feb – 15 Jun, reflecting the onset of Covid-19 (the first instance of quarantine and patients with coronavirus) in the US. Collectively, these model portfolios were used to arrive at research providers’ rankings based on the performance added by their research.
- 16851 recommendations were given during the period of analysis: 01 Feb – 15 Jun.
- 8 sectors reviewed – Basic materials, Consumer goods, Financials, Healthcare, Industrial Goods, Services, Technology and Utilities.
- Overall, almost a third of the firms in the final shortlist delivered positive performance, while almost 3 out 4 firms beat S&P 500. Range of performance overall was 67.84% (difference between the highest and lowest performer).
- On sectoral level, services sector received the highest number of recommendations, and all the research providers outperformed the market (S&P 500 Telecom + S&P 500 Real Estate)
- Utilities received the lowest number of recommendations and only 2 firms produced a positive performance.
- UBS gave the highest number of recommendations during the period of analysis – 887.
Invisage is an analytics platform for identifying the best alpha in research, faster.
Invisage uses advanced data-analytics, NLP and AI to extract actionable investment ideas from research content. It empowers investment decision making by pooling together relevant insights and forming consensus across asset classes including equities, bonds, commodities and even macro so you don’t miss out on any nugget of alpha hiding in the narratives.
Invisage seeks to identify which research adds performance to investments, so you can refine your consumption towards the research that adds the greatest alpha.