A study conducted by Andrew Clare, Professor of Finance at Bayes Business School, together with the Independent Investment Management Initiative (IIMI) has identified four key factors that boutiques themselves say deliver a competitive advantage.

In the study The Case for Boutiques – A Survey of European Boutique Asset Managers a survey of 87 mainly European boutique asset managers found the key factors include:

  • their independence
  • their focus on a small number of strategies
  • alignments of their interests with those of their clients
  • their agility / adaptability.

Around 88 per cent of the firms surveyed employed fewer than 100 people, with one third having fewer than 10 full-time staff. While around a quarter oversaw investments of between $10bn and $50bn, nearly half managed assets below $1bn.

Other key findings of the study include:

  • Boutiques are most concerned about: distribution; the ability to achieve a critical mass for larger allocations; and promotion by consultants all featured prominently
  • More mature boutiques see succession as a significant as a significant issue for their businesses
  • Respondents argued that performance-related fees helped them align their success with that of their clients, but that investment platforms were often not willing to accommodate such fee structures.

In mind of the ongoingi asset management industry consolidation, Andrew Clare said: “The top 100 fund managers accounted for $92.8 trillion of the $120 trillion assets under management (AUM) last year. We need to understand what this means for new entrants – who often bring innovation – and for the millions of investors the industry serves.”

Sebastian Stewart, Chairman of the IIMI, and Bayes MBA alumnus, and co-author of the study, said: “After years of industry consolidation and mass migration to passive and semi-passive strategies to harbour larger pools of capital, the role of specialist asset managers has never been more important in offering opportunities to diversify, outperform indices and ultimately de-risk portfolios. Having identified a boutique asset management premium, we now have hard data to better understand the characteristics that give specialist asset managers an edge."

Dani Hristova (pictured), CEO of IIMI, and co-author, added: "This research highlights how valuable it is for clients, allocators and the industry more broadly to consider the merits of boutique asset managers. The defining features of these companies as outlined in this paper provide reassurance to the industry that boutique firms are consistently driving forward a ‘client-first’ culture."