TIM Group Ranks the Best Institutional Equity Salespeople and Brokerage Firms in the World

Alpha capture is the art of capturing brokers’ best investment ideas, and transforming them into positions that outperform. During 2012, more investors practiced this art in equities markets than ever before. Falling trading volumes, synchronised macro-driven market trends and increasing market correlation have dashed the returns of less robust strategies while alpha capture has flourished.

Our annual TIM Ideas Top Performer Awards, identify and quantify the best performing equity salespeople and their brokerage firms, based on the outperformance, or alpha, of their ideas. Now in their second year, they are the only quantitative rankings of their kind. While buy-side users of our service can evaluate the performance of their own brokers every day, the TIM Ideas Top Performer Awards are the only time the buy-side can see how the best equity salespeople and their brokerage firms performed.

We would like to thank those who participated in this year’s awards and offer congratulations to the winners. We hope the findings are useful to both our sell and buy-side clients in addressing today’s, and tomorrow’s, market challenges. We also welcome the opportunity to discuss our findings and their implications for your business in the year ahead.

The Data

These results are based on analysis of almost one million long and short equity trading ideas, developed by more than 4,000 equity salespeople at more than 300 brokerage firms around the world during 2012. This year, the rankings themselves span four categories and five regions – Europe, North America, Asia (excluding Japan), Japan and Australia.

Performance was measured by the average relative return, per idea, from the time it was initiated to the time it was closed, versus the performance of the relevant regional or sector benchmarks, during that same period.

For full details of the methodology and the results please read our full Top Performers Report 2013.

The Results

Globally, the story is very positive for alpha capture. Average annualised outperformance was equivalent to a 15% return above the market. By region it ranged from 10.5% in North America to 24.3% in Japan. Europe, the first to broadly adopt alpha capture, starting in 2005, still leads in terms of idea volume, though North America is now a close second. Regardless of which region or sector you look at, the returns were always market-beating, a clear sign that many buy side firms can benefit from broker-sourced trade ideas.