Over the last 20 years boutique fund managers have outperformed their institutional counterparts, new research by US-based Affiliated Managers Group (AMG) has found.
A new study conducted by AMG found that over the research period, the average boutique outperformed the average non-boutique in nine out of 11 product categories by an average of 51 basis points.
AMG analysed 1,200 investment management firms over a 20-year period ending 31 December 2014.
This would have resulted in clients gaining 11 per cent greater wealth over the last twenty years than if they had they invested with a non-boutique.
The research also found boutiques delivered “significant value as compared to primary indices”.
“The average boutique strategy outpaced its primary index in 9 of 11 equity product categories, by an average annual 141 basis points after fees,” a statement from AMG said.
Commenting on the findings, AMG chairman and chief executive Sean Healey said this shows boutiques has created “significant value” for clients over the long term.
“The primacy of a boutique investment manager lies in its focused, entrepreneurial culture and ownership structure, with principals maintaining significant, direct equity in their business,” Mr Healey said.
“Our research clearly demonstrates the significant value that boutiques have generated for investors over an extended time horizon.”
Mr Healey highlighted that there are several characteristics that position boutiques to deliver consistent and superior long-term investment performance.
These include having principals with significant, direct equity ownership that ensures the “alignment of interests with clients” and the presence of a “multi-generational team” that is engaged across the business.
Other characteristics of boutiques include having an “investment-centric organisational alignment”, and that principals have “long-term orientation in mind and are committed to building an enduring franchise”.
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