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From Benedicte Gravrand, Geneva: In addition to hiring their own researchers, some hedge funds use analysts from outsourcing firms, such as Amba Research, who assign analysts to do research for specific clients. Amba Research has some 70 clients in the financial arena. Mr. Anand Aithal, one of Amba’s partners, gave an overview of the nascent industry to Opalesque.

The big picture “Hedge funds have to do more and more of their own research. In the old days, The Street relied on the sell-side brokerage firms to provide not all research but at least a lot of the initial background work. Now the sell-side is covering less research and is being much more discriminating in whom they are speaking to. We have seen that trend in the equity space. I think it is even more pronounced in the credit space because a lot of investment banks are closing down their own research departments or merge them with the trading desks.”

“The big macro trend is that in the old days, research was provided centrally and now today everyone has to do more and more research on their own. That puts a tremendous strain on the hedge fund community and it makes the screening processes harder.”

FSA regulations on commission unbundling came into force in January 2006 and required UK fund managers to state explicitly in client reports the cost of execution and external research. This drove down the volume of broker equity research. The......................

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