Marketbeat.com has provided us a piece of investment research that I much appreciate. In fact, that company has reviewed all research Buy and Strong Buy recommendations from 146 broker-dealers for 2015, plus 135 such firms for 2014 and 217 of them over several years. They have calculated the average 12-month Rate of Return of those recommendations. In addition, they compared the subsequent actual performance to the 12-month target prices set by those firms. They deemed most trustworthy were the broker-dealers with the highest average ROI and the lowest average variance between target and actual price.
I will give you my take on their report, but hope that you take the time to ask marketbeat.com for a copy of the full report.
From the data, I grouped the results from the 217 broker-dealers who issued recommendations over several years: (1) USA major firms (2) USA smaller firms (3) Canada’s big 5 banks (4) Other Canadian firms (5) International major firms, and (6) other smaller firms.
The average ROI was as follows:
Fig. 1
The Canadian major banks were solid performers, particularly Scotiabank (30.9% ROI on 3798 reports) and TD (17.7% on 3200) were the best and to my surprise RBC (7.0% on 11234) was by far the worst. The large US and large international (ex-Canada) firms were worst.
For the larger US firms, the results clearly showed that Zacks (another surprise) and Raymond James were best. In fact, Zacks and Raymond James have also been very good for the past two years.
Fig. 2
The worst of the lot were Morgan Stanley (5.72% ROI on 3790 reports) and Citigroup (5.84% on 6492).
Fig. 3
Most of the large international broker-dealers fared even worse. Santander’s results were even negative.
Fig. 4
The best three – with UBS bar far leading the group – were as follows.
Fig. 5
Marketbeat.com has provided a valuable service here. Even better, I think, would be if they were to compare these results to the actively managed mutual funds and ETFs of these broker-dealer firms. I think the public would be shocked that what Humongous Bank & Broker actually does for clients (in the form of managed ETFs and mutual funds) is worse than even what they say, which itself is, on balance, nothing they should be proud about.
During 2017, I intend to publicize this issue.
All the best,
/Bill
