IOOF backs boutique fund managers

IOOF backs boutique fund managers

IOOF's boutique fund manager program helped boost the 'active share' of the IOOF Australian Share Trust throughout 2015.


Speaking to InvestorDaily, IOOF portfolio manager for strategy and international equities, Stanley Yeo, said IOOF's Boutique Program places money with 'start-up' fund managers.

"A lot of research shows that managers in this early stage tend to outperform the market because they have motivated decision makers and they’ve got low funds under management," Mr Yeo said.

"That helps us have higher active share. That criticism that multi-managers have lower active share is misguided."

Relatively young fund management businesses also tend to be nimble and less bureaucratic, given their lower funds under management, he said.

"We have a portfolio where we find managers in that start-up phase, and in some situations the fund will take an ownership stake as well in these boutique portfolios," Mr Yeo said.

"There’s less business risk as well for these guys – they’ve got nothing to lose. They tend to make more high conviction decisions," he said.

At 31 December 2015, the Boutique Manager Portfolio made up 13.45 per cent of the IOOF Australian Share Trust, and consisted of MST, Philip Capital and Selector Funds Management.

OC Capital has been transitioned out of the boutique section of the portfolio and into the Australian Share Trust proper, Mr Yeo said.

"Once a manager’s appointed to that portfolio, we give them a three-year lifespan and then they get reviewed," he said.

"OC Capital has been migrated from that portfolio to the core portfolio. They’re no longer a start-up and we still have conviction in their performance."

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IOOF backs boutique fund managers
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