A big brokerage firm will publish thousands of pages of research each month, yet most of it ends up in the wastebin, such is the low esteem that fund managers hold for much investment research.

There is thus keen interest in using the internet to improve the distribution of brokerage research and ensure that it gets read by the people who matter - those with the power to buy or sell.

Online publication of research is a relatively recent phenomenon and few sell-side firms see it as a serious alternative to traditional paper reports.

According to a report from Blue Curve, a UK-based financial software company, 75 per cent of financial firms published their research online at the end of 1999. Most firms had established their online presence during the previous 18 months. Nevertheless, traditional paper-based reports still accounted for more than 88 per cent of their research output.

Most firms see the internet as merely an extension to existing research distribution methods, says Blue Curve. Some, however, have recently discovered that the internet can do much more and are now exploring ways to tailor research and build closer online relationships with their buy-side clients.

"The advantage of the internet is that it allows you to customise information more closely to the client's needs," says Charles Cara, product manager for GloBEWeb, the internet-based research service of Dresdner Kleinwort Wasserstein (DrKW), a leading securities house.

As well as carrying DrKW broker reports in electronic format, the GloBEWeb site allows clients to download quantitative data.

Institutional investors have traditionally depended on the information put out by sell-side firms such as DrKW to advise them on whether to buy or sell a stock. By distributing research to their favourite buy-side clients, the brokers hope to get more business.

But the sheer quantity of research published today is creating problems. Fund managers' desks are piled high with unread brokerage reports and one City of London firm spends £2,000 a year to recycle reports.

Nevertheless, few managers can manage without broker reports because they depend on them for information. They also use favourable analysts' reports to add credibility to their stock selections as large investment houses require investment decisions to be vetted by a committee.

"Research is an important service for DrKW clients and our aim is to make it easier for them to produce the information they need to go to the investment committee," says Mr Cara.

Using DrKW's GloBEWeb service, data can be selected, sorted and presented in different ways, allowing clients to create customised comparison tables rather than depend on the standard sector tables, for example.

The customised data can then be downloaded into a spreadsheet and used in a fund manager's own report. Today, fund managers will often waste time retyping the quantitative data from paper reports into their own documents.

DrKW is trying to cement tighter links with its fund manager clients. But many investment houses are trying to move in the opposite direction by using the internet to access a much wider range of information sources.

First Call Interactive is one example of this new service. Owned by information giant Thomson Financial, FCI lets clients create customised web pages using content from First Call's database of 6m documents from 700 brokers. These reports can be mixed with other Thomson Financial content, such as earnings estimates, and proprietary research generated by the client.

The FCI service can be located on an intranet or hosted externally using the application service provider (ASP) model, which is proving popular for online financial research.

Typical deal

Multex, the main rival to Thomson in financial information, is also a big fan of the ASP model. A typical ASP deal is that signed recently with Julius Baer Securities to build and maintain its research websites.

Multex will develop and host an internet website providing Julius Baer's fund managers and analysts with global access to its internal investment research as well as broker research.

It is not just the giants of financial information which are exploring new ways of using the internet. "The internet is a useful tool for delivering information but for many firms that is as far as they have gone," says John Thorne, founder and chief executive of ResearchSummaries.com, a UK-based start-up. "We talked to a lot of institutional clients and they told us their biggest problem was that they didn't have time to access information themselves."

As its name suggests, ResearchSummary.com aims to speed this process by providing a single site where clients can read the executive summaries of the main broker reports on a particular stock.

"Nobody has time to read the entire report and they just want to be able to take a view on what different brokers are saying about the stock," he says. If clients need to read more of a particular report, they can click on a link to go direct to the proprietary portal of the sell-side firm concerned.

ResearchSummary.com went live in December 2000 and charges institutional clients $200 a year. The site collects data on which reports are read most often and this is provided to the contributing firms.

Mr Thorne sees the site evolving to support much more sophisticated usage analysis and that will allow ResearchSummary.com to charge firms for this more specialised information. If the service takes off, he hopes to extend it to retail investors, although this may be a tougher market to crack.

There are compliance problems in distributing information to retail investors and many securities houses want to restrict who reads their reports. Also, subscription-based financial websites have not had much success to date.

Nevertheless, Mr Thorne believes the content on ResearchSummary.com is sufficiently compelling that consumers will be prepared to pay for it. "The retail market has never seen anything like this before," he says.