NETHERLANDS – PGGM, the Dutch healthcare sector pension scheme, has warned against the need to formally free market research from investment banks and has started investigating if the present practice can just be improved.

The healthcare scheme said it was satisfied about all the research it gets. “Although the quality varies, some research is very good”, told PGGM’s Jaap van Dam the daily Het Financieele Dagblad. “If you remain critical and use multiple sources, tied-up research is very useful”, added the head of the scheme’s internally managed equity.

At present large investors usually get the equity research as part of the package from their trader. A series of research scandals in the US has cast doubts upon this practice and led to numerous small independent research boutiques being formed that will be paid directly rather than receiving money out of the commissions and trading fees paid by investors to the banks.

Van Dam foresaw problems in financing explicitly billed research. “For a long time investors have got the research for free. It will be psychologically difficult if they need to pay for it”.

As a result, PGGM has formed part of a group of leading European institutions that have commended 10 brokerage firms for the way they analyse non-financial material in a bid support their efforts.

But PGGM’s initiative conflicted with the conclusions of Iris, a research arm of Dutch bank Rabo and its fund manager Robeco, which found breaking the broker recommendatiosn from investment banks would improve research quality.