The Research Canadian Investors Rely On
In a tumultuous year, investors stuck with proven research providers, according to the All-Canada Research Team.
Nearly everything else in the world has changed — but the top research team in Canada hasn’t.
RBC Capital Markets has again topped Institutional Investor’s All-Canada Research Team in the second annual ranking of the country’s top equity research firms.
The results were decided by directors of research and heads of investment at institutions with major securities holdings in Canada, who rated the country’s top research providers across 16 market sectors. Their votes were weighted by commission spending to produce a top-10 leaderboard of Canadian equity research firms.
Despite a year of upheaval caused by the coronavirus pandemic, the top five results mirrored the inaugural 2019 ranking. BMO Capital Markets followed RBC, repeating its second-place finish; Scotiabank held third; and CIBC World Markets and the Toronto-Dominion Bank again placed fourth and fifth, respectively.
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Canada has fared exponentially better than its southern neighbor in the global pandemic. Covid-19 cases in the U.S. remain steadily on the rise, increasing 36 percent in the last two weeks according to analysis by the New York Times on Wednesday. Canada extended the border closure with the U.S. until at least November 21, citing the public health of its citizens.
Still, the pandemic and its economic impacts have “rapidly altered the outlook for many industries and companies” in Canada, according to André-Philippe Hardy, head of Canadian and Asia-Pacific research at RBC Capital Markets.
“Existing trends have accelerated, new ones have emerged and more is surely coming in 2021,” he said in an emailed statement. “It is a very exciting time to be an analyst: The forces of change are creating new opportunities and challenges at an extremely fast pace, and of large magnitude. Identifying those changes and predicting the impacts on the industries and companies we cover is incredibly stimulating for research analysts and associates.”
The challenge for the top equity research firms is to decipher what impacts are ephemeral and which are here to stay.
“The essence of what we do hasn’t changed: We provide differentiated advice to our clients to help them meet or exceed their investment objectives,” Hardy added. “How we do it has certainly changed — face-to-face meetings have become video calls, basements and dining rooms are the new offices, and road warriors are now home bodies. But what we aim to do hasn’t changed.”
Hardy believes the biggest lasting shift will be the reduction of travel and in-person meetings. “I believe most of our clients would prefer a timely video interaction over a less timely face-to-face exchange,” he said. “If I am correct, it will reduce the amount of travel analysts do, and thereby increase the time they can spend on research or client servicing.”
Indeed, RBC’s analysts once again led the ranking of individual equity researchers. The Toronto-headquartered firm banked 12 team positions to second-place finisher BMO Capital Market’s nine. Credit Suisse — the highest-ranking global firm in this survey — tied with Scotiabank for third with four team positions each. The Toronto-Dominion Bank rounded out the top five with three ranked analysts.
In its second year, the survey attracted nearly 400 respondents at 270 institutions spending at least $250,000 on research commissions. It also produced two rankings in which voters’ responses were weighted by their assets under management. RBC swept those as well.
Hardy credits the firm’s performance to its innovation both before and during the coronavirus pandemic — from changes in content delivery to the data-powered research delivered by the firm’s data science division, RBC Elements.
“Innovation is a core tenet of RBC Capital Markets and the research department is no exception,” he said.