How transparent research need to be?
Gilbert Van Hassel, CEO of Robeco, a $195bn Dutch group specialising in Quants, emerging markets and sustainable investing, made a series of points about fees and environmental, social and governance (ESG) criteria in yesterday’s FT FM. He pointed out that Mifid II has been good for investors, leading to greater clarity in their decision making. He also points out that it has pushed up portfolio manager’s costs.
Corporates looking for investment and institutional support in the markets should infer the old broker model did not provide independence in the eyes of professional investors and that they should look for a high-quality, issuer pays service with the correct protections in place for the producer of the research to be as independent as possible.
Mr Van Hassel is also a particularly credible advocate of ESG (he created a ratings system he sold to S&P Global). This suggests a third take away, which is that post Coronavirus, ESG will only increase in importance as a filtering tool for professional investors and perhaps retail too.
In our view, Companies looking for equity and debt investors could do a lot worse than embrace Mifid II and its effect on research provision transparency and invest in their ESG polices to make them verifiable and in line with investor sentiment.