MiFID II leaving European managers behind U.S. peers?
It's possible. Research from Evercore ISI shows European managers lagging U.S. managers in nearly every major equity fund category, pointing to research spending as the chief differentiator. U.S. managers outperformed in 13 of 16 active equity focuses in 2019, by an average 3.2%. Asia ex-Japan strategies were the only category in which Europeans beat their U.S. counterparts.
While explicitly identifying how a manager pays for its research as the culprit of comparative over/under performance, Evercore's data covered more than 8,000 managers and showed significant gaps in spending. U.S. managers spent an estimated $6.2 billion of client money on research in 2019, but outperformed by 265 basis points, equivalent to $245 billion.
Specific spending data on equity research by European managers, now mandated to come from their profit-and-loss profile instead of client money, was not provided, but the report did note significant gaps between the two groups' reported budgets.