An increase in assets under management (AUM) does not automatically constitute a growth in research budgets for buy-side firms, a recent survey by Substantive Research has revealed.
Buy-side research budgets are instead remaining largely static, only reducing by 0.2% in H1 2025.
However, in both the US and Europe, when budgets are measured as basis points of AUM, the results show a larger decrease – of 3% in the US, and 1.4% in the UK and EU respectively.
Thus, increases in investment research spend, although sometimes still small, are now being driven by other factors such as new analyst coverage requirements and rising buy-side headcounts.
This indicates that since Mifid-II, research valuation processes have become more robust, ensuring that European end investors get fair value for the payments they make for research.
Speaking to The TRADE, Mike Carrodus, chief executive of Substantive Research, said: “In the last few years market share has all been about retaining and attracting talented analysts while the competition around you was cutting costs.
“Now that the industry has stabilised from that perspective, it’s the firms that have proactively driven increased analyst and corporate access engagement that are the ones gaining market share in the post-Mifid II landscape.”
Read more – The rebundling conundrum
The latest findings come as asset managers begin to adopt Commission Sharing Agreements (CSAs) to permit the ‘bundling’ of third-party research and execution services, with a Substantive Research report in July 2025 revealing that 87% of respondents predicted that at least half of all research budgets will become client-funded within the next two years.
Carrodus added: “The upgraded research valuation processes that buy-side firms now use has pushed them to extract more service and access from their existing broker relationships than they could previously, and it’s only if higher AUMs create new requirements from added headcount or equities coverage that budgets increase.
“However, many providers would also say things have gone too far, with regulations reducing incentives to innovate and grow their coverage, hence the rollback of research unbundling rules from the regulators.”
Pick of the bunch
For European end investors, the survey indicates positive change regarding effective post-Mifid II research valuation processes, yet the research also revealed that the buy-side still appears to exercise loyalty when it comes to research spend.
Of the brokers surveyed, the top ten currently dominate approximately 55% of investment research budgets, and JP Morgan maintains the market share top spot in research payment rankings, followed by Jefferies and UBS.
Similarly, despite a lack of momentum in research budget growth, bulge bracket providers still increased their pricing by an average of 1.5% in H1 2025, while in contrast, specialist research-driven brokers decreased by 0.5%.
To explain this increase, the survey pointed towards possible factors, such as a greater consumption of analyst meetings, or that sell-side relationships are held in higher esteem by asset managers than the value of research alone.
Substantive Research surveyed 44 of the largest asset managers to collate the research, with a combined AUM of more than $18 trillion – 30% North American, 20% from the EU, and 50% from the UK.