Australia’s investment market was proving tough for new boutique investment management businesses as investors shied away from risk, however, opportunities existed offshore, an industry executive said yesterday.
“There is certainly no shortage of new businesses starting up, certainly outside of Australia. Here in Australia, I think it has become a bit more challenging,” MLC Investment Management head of equities Jonathon Armitage said.
“I think part of that is just because of the size of the market. I think primarily you had this huge growth in boutiques, but some of them never really reached the scale that you might see overseas.”
Armitage said he was seeing a number of very attractive boutiques start up worldwide, particularly in traditional asset management areas such as Edinburgh, Connecticut and San Francisco.
“There is no doubt that the entrepreneurial culture seems alive and well and I think that one of the drivers for that is you’ve seen concentration of assets in some of the big asset managers globally and some of those returns have not been as good as hoped, and that will always spur on people to set up their own business,” he said.
“They tend to be people who have come from a very strong asset management background, they tend to have pretty good pedigrees, some may have been able to persuade clients to come with them, and in certain markets, particularly the US and UK.”
MLC Investment Management head of private equity John Brakey said trends for boutiques in Australia tended to come in cycles.
“I think part of it is also around risk and statutory compliance and I just think that’s where a lot of Australians are right now,” Brakey said.
“They’re paranoid about risk and any stuff-ups on their clients and things like that, so they’re shifting away from boutiques. It makes it a tough market.”
