There has been a shake-up among the leading equity research providers in Canada — everywhere, that is, but the top spot.
RBC Capital Markets has extended its reign for a third year in a row, taking No. 1 in Institutional Investor’s All-Canada Research Team, an annual ranking of the country’s top equity research firms that debuted in 2019.
While RBC has ruled the leaderboard since the survey’s inception, there are some changes further down the rankings and among the “Big Five” — the name given to the large domestic banks dominating Canada’s financial landscape.
While BMO Capital Markets has repeated its second-place finish, this year the firm shared the honor with Scotiabank, which improved one spot from third in 2020. CIBC World Markets has moved up from sixth place to take fourth. And in the biggest move within the survey, BofA Securities has taken fifth, making it the sole international firm to crack the top five. This improvement from last year’s seventh place finish bumped The Toronto-Dominion Bank out of the top five and into seventh place.
Providers were rated across 13 market sectors by directors of research and heads of investment and institutions with major securities holdings in Canada. While the main results were weighted by commission spending, rankings weighted by assets under management were also produced. In the AUM-weighted leaderboard, first place still went to RBC. BMO and Scotiabank also shared second here. But BofA Securities ranked even higher, placing fourth, while CIBC placed fifth.
André-Philippe Hardy, head of Canadian and Asia-Pacific research for RBC Capital Markets, outlined in an emailed statement how the firm is meeting the buy-side’s needs, from the increasing importance of environmental, social, and governance research to harnessing big data.
“Staying up-to-date on investor interest is paramount to our success,” Hardy wrote. “Our four premium brands are a direct reflection of our focus on clients. Through our RBC ESG Stratify brand, we are increasing the integration of ESG factors into our fundamental analysis, in line with what is happening with our buy-side clients. Through our RBC Elements brand, we are taking advantage of the explosion in data that wasn’t previously available and incorporating it into our fundamental analysis.
“Our RBC Imagine brand was created to focus on the disruptive forces that will transform the world — a brand that has become even more relevant given accelerated changes brought on by the Covid pandemic,” he added. “Our RBC Fusion brand showcases high quality fundamental research in which our analysts have differentiated insights and meaningful conclusions versus the status quo, helping investors zero in on our most important ideas in a world of overwhelming information.”
Among a strong field of top providers, especially domestic ones, Hardy credited his firm’s analysts as well as its footprint beyond Canada as a differentiator. “We have a strong blend of experienced and emerging analysts who work together to provide thought leadership to our clients,” he wrote. “Our Canadian team’s insights benefit immensely from the collaboration with our colleagues in the U.S., U.K., and Australia, as well as the partnership with our data science team, which supports our fundamental analysts with advanced analytics of structured and unstructured data.”
This collaboration extends to the firm’s equity sales team, according to Bernie Allion, head of equity sales in Canada for RBC Capital Markets. “Sales and research need to work collaboratively to drive strong client relationships,” he wrote in a statement to II. “Understanding the full research offering, combined with knowing our clients’ needs, allows sales to tailor its research call and service clients most effectively. Sales needs to constantly look for opportunities to work with analysts to help them build new relationships and strengthen existing ones. Leading with differentiated value-add research is essential in a highly competitive market. It’s a continual process.”
This approach has undoubtedly helped the firm secure the No 1. spot in the debut of II’s All-Canada Sales Team.
BMO captured second place while Scotiabank followed in third. CIBC and Bernstein took fourth and fifth, respectively.
Voters were asked to consider five attributes including the sales team’s ability to add value to research, provide a global context, and generate ideas. And pandemic year or not, those ideas and a client-centric approach remain paramount, according to Allion.
“It’s about taking a team approach in all aspects of the business to deliver the best solution for the client,” he wrote. “Clients continue to look for the best ideas and advice from their trusted advisors. This has not changed. A good idea is a good idea. Good advice is good advice.”
Clients have more choices than ever now, he added, which means providing a differentiated product is even more critical.
“One of the biggest opportunities continues to be driving deeper relationships with our clients by providing valuable advice within an investment landscape that is constantly changing and dynamic,” Allion concluded. “At RBC, we lead with advice empowered by ideas, insights ,and innovation using our four premium research brands as key differentiators in the marketplace.”