Pity the Analysts

While the number of analysts on Wall Street has been shrinking since the boom turned to bust, the decision
by mega-fund Capital Group, with its $500-billion in assets, to cut commissions is going to accelerate things:

Capital Group, the giant fund manager, has cut the trading commissions it pays to US investment banks. The move intensifies the squeeze on research budgets and has sent shockwaves through Wall Street, which fears pressure for increased disclosure of commissions will reduce the amount funds will pay for research.
The cuts by Capital, which manages funds worth more than $800bn, have added to the uncertainty over the future of bank equity research units already badly hit by reforms agreed two years ago with Eliot Spitzer, New York attorney-general.
Wall Street executives said banks were currently in discussion with Capital about the commission cuts and how much the firm pays for research. One insider said the move could reduce overall commissions paid by the group by up to a third.

Related posts:

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  2. Siegel vs. Arnott: The Stock Market Debate
  3. Research shrinkage
  4. John Battelle on Saving the WSJ
  5. Getting Berenson’s Number

Comments

  1. b7j0c says:

    Wall Street is going to be replaced by a bank of linux computers at some point. Compare SPY to any “moderate risk” managed portfolio. Compare DIA to any “low risk” managed portfolio. Compare QQQQQ to any “high risk” managed portfolio. Starting to see trends here? ETFs are going to clobber these fund managers etc.