Impact of miFID on ER access & alpha to SM vs MM HF
From what I read US industry is insulated from miFID until July 2023 though I am sure the industry has undergone changes since it happened in Europe few years ago.
-
How does miFID impact on HF access to due diligence and equity research?
-
Does this mean they have to increasingly rely on in house research?
-
How does this play out for SM vs MM funds in terms of alpha generation?
-
For MM funds, due diligence and research I heard have stricter compliance compared to SM funds (eg hand holding process with the sell side analyst who covers the stock, to access company management). Does that mean funds with stricter compliance will increasingly struggle to generate alpha in future?
-
Given SM funds have less resources (less money and smaller team) to spend on developing in house research and purchasing ER reports (given unbundling of ER costs in miFID), does that mean they will struggle more than MM to generate alpha? Since miFID effect will be more prevalent? Although, you can’t generate alpha by just relying on sell side research anyway.
