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Top Researchers for Tough Times

Analysts are in high demand at money management firms. Here are the ones whose coverage impresses their sell-side counterparts.

Equity markets in the U.S. have posed herculean challenges lately for asset managers. With the Standard & Poor’s 500 index struggling to eke out a 2.3 percent gain year-to-date through mid-November and some economists predicting the U.S. economy will fall into recession in the coming months, investors are clamoring for guidance. One solution for many buy-side firms has been to add more analysts.

“We’ve deepened our team in lots of areas and are finding that many skilled, talented people are interested in joining the buy side,” says William Stromberg, head of global equity research at T. Rowe Price Associates in Baltimore. His firm’s equity-research head count jumped 15 percent over the past 12 months, to 200 analysts worldwide, and its coverage universe expanded to 1,700 stocks.

Fidelity Investments has also increased its research staff by about 15 percent over the past year; the Boston-based firm now has nearly 350 equity analysts. “We’ve been able to do more in-depth research on the names we were already covering, as well as increase the number of companies under coverage,” explains Brian Hogan, head of U.S. equity research.

The growth of buy-side research stands in stark contrast with that of the sell side, where in recent years many firms have either been downsizing or holding the line on head counts in their research departments even as investors continued to pour money into investments. Net inflow of new cash to the nation’s mutual funds surged 85.9 percent last year, to $474 billion, according to the Investment Company Institute, a Washington-based mutual fund research association.

Which buy-side researchers do the best job of meeting the needs of investors? We asked sell-side analysts in the universe of our 2007 All-America Research Team survey (Institutional Investor, October 2007) to name the money management counterparts they consider most impressive in nine industry categories, from Basic Materials to Telecommunications. More than 570 sell-side analysts from some 100 firms responded, and the top vote-getters in each category make up this year’s Best of the Buy Side.

Two of the nine winners made the list last year: Henry Ellenbogen, a Media and Internet analyst with T. Rowe Price, and Rasmus Gerdeman, a Basic Materials analyst with Neuberger Berman, a division of Lehman Brothers. The others are either new to the Best of the Buy Side or are returning after an absence.

Whether veteran or newcomer, these winners have one trait in common: a valued relationship with their Wall Street counterparts. Besides providing access to company managements, the most helpful sell-siders also alert money managers when change is on the way. “If a sell-side analyst starts to develop a different point of view from the conventional wisdom, that’s a clue that we need to investigate more closely,” says Jack Rivkin, chief investment officer for Neuberger Berman.

Stromberg of T. Rowe Price says the relationship goes even deeper. “We view the sell side as partners,” he says. “We use a wide range of shops for feedback, market perspective and ideas that may be a little off our beaten path.”

The Best of the Buy Side

Basic MaterialsEnergyMediaRasmus GerdemanDenis WalshHenry EllenbogenNeuberger BermanBlackRock Fin. MgmtT. Rowe Price Assoc.

Capital Goods/IndustrialsFinancial InstitutionsTechnologyPeter BatesPaul StockingPeter WrightT. Rowe Price Assoc.RiverSource Inv.Fidelity Inv.

ConsumerHealth CareTelecommunicationsJoseph FathJason (Jay) NogueiraVincent RiversT. Rowe Price Assoc.T. Rowe Price Assoc.Pyramis Global AdvisorsBuy-Side Compensation: Higher Demand, Greater Rewards

Rising demand for research means rising income for buy-side equity researchers. Analysts at U.S. money management firms earned on average $292,898 in total compensation last year, 23.6 percent more than in 2005, according to Institutional Investor’s exclusive U.S. Buy-Side Equity Compensation survey. More than half the income, 56.4 percent, was paid in bonuses.

Buy-siders who performed double duty fared

even better. Those serving as analysts/portfolio managers earned, on average, $536,814, 21.3 percent more than in 2005, and portfolio managers/fund managers took home $570,291, 27.8 percent more than in 2005. Bonuses accounted for nearly two thirds of the compensation earned by researchers in dual roles (64.3 and 65.9 percent, respectively).

Survey results are based on the responses of more

than 670 buy-side analysts, who were asked to report their salaries and bonuses for 2005 and 2006, and salaries for this year. Although 2007 bonuses have not yet been awarded, 80 percent of respondents said they expect to receive as much as or more than they did last year. Polling concluded in September.

For additional results, or to compare buy-side analyst compensation with that of the sell side, visit our Web site,

Job function

2006 total compensation (mean)

2005 total compensation (mean)

% change





Analyst/Portfolio Manager




Portfolio Manager/Fund Manager