Revenues and profits at boutique research firms have soared this year with the introduction of rules on unbundling which have allowed fund managers to allocate more money towards independent research providers.

The average group produced nearly £5.5m (€8.2m), with turnover up more than 140% at the 16 London-based sample companies, according to Financial News research. On average, companies more than trebled profits to nearly £1m in the latest financial year. The most profitable was Arete Research, a technology research firm set up by Richard Kramer, former head of technology research at Goldman Sachs. It generated profits of more than £3m on revenues of nearly £3.8m. The biggest increase in profits was recorded by Japanese equities research firm Japaninvest, founded four years ago by Rupert Eastwood, a former head of Jardine Fleming's M&A origination and execution business, which turned a £26,645 loss into a £590,088 profit. Four firms showed a decline, with Dutch equities specialist Independent Minds losing £1.7m, according to its latest accounts. Nine of the 16 firms surveyed were founded in the past three years. The youngest, Absolute Strategy Research, set up by Ian Harnett, a former chief strategist of UBS, and David Bowers, a former chief strategist of Merrill Lynch, opened for business in September, while the oldest, Lombard Street Research, has been operating for more than 17 years. The firms, on average, employ 20 people. The largest, Execution Limited, founded by Nick Finegold, a former head of sales and trading at Deutsche Bank, has 60 staff, while the smallest, Longview Economics, has just one full-time employee. Fund managers have become interested in independent research, though many say unbundling rules have not had as much impact as predicted, said the chief executives canvassed by Financial News.