Comparing the August month-end one, three and five year returns for a selection of 10 funds in the boutique and institutional space shows no definitive success pattern for either, according to FE Analytics.
Of five boutiques and five institutional Australian equity funds compared by Money Management, the Macquarie Australian Equities fund had the strongest annualised returns over one, three and five-year periods, and sat highest performance quartile for each, with consistent returns higher than the AMI Equity Australia benchmark.
The AMP AFS Australian Equity Enhanced Index, the IOOF MultiMix Australian Shares fund, the UBS Australian Share Fund, and the Perpetual Wholesale Australian fund’s performance was compared along with the Macquarie Australian Equities fund, and boutiques also against the AMI Equity Australia benchmark which were the Alphinity Australian Share Fund, the Platypus Australian Equities Fund, Arnhem’s Australian Equity Core Fund, and Bennelong Funds Management’s Australian equities offering.
Macquarie Group’s fund was the highest performer, and recorded annualised one, three, and five year returns of 14.89 per cent, 11.52 per cent, and 14.69 per cent respectively.
“Because the fund is unconstrained it has the ability to perform well or outperform the market over almost all market cycles,” Macquarie head of equities, Patrick Hodgens, said.
“The fund is broadly immune to the value vs growth or industrials vs resources cycles in the Australian market, we have a blend of stocks in all of those themes.”
Hodgens said the fund remained underweight with banks and REITs which had aided the stability of its returns, and said holdings with Qantas, Reliance Worldwide, and Flight Centre had driven high returns for investors.
The institutional fund with the lowest returns was the UBS Australian Share Fund, with annualised returns over one, three and five-year periods, of 5.55 per cent, 1.37 per cent, and 8.20 per cent.
Commenting on the fund’s performance, UBS head of Australian equities, Jakov Maleš said results had been disappointing, but investors had a few things to consider before selecting boutique offerings.
“Our performance has been disappointing for the last few years, there’s no doubt about it, but that’s not been driven by our structure or the people we have,” Maleš said.
“There’s a view that the boutiques can keep people and incentivise people more because investors have a share in the business [and] that’s a strong point, but most institutional managers have responded with remuneration structures which are actually very competitive.”
Maleš said UBS had not lost managers to boutiques and held the view that their success relied heavily on a “superstar” investment manager.
“A lot of boutiques…are started by a superstar and he or she fills the seat with bodies, but in the end, the superstar collects everything…the superstar demands a lot of profits,” he said.
“We’ve been holding contrarian positions for quite some time and clearly they haven’t paid off yet, but what’s hurt it is we haven’t been positioned in these various, top-down driven areas like bond proxies and miners,” he said.
“We have a structure in place that competes with the boutiques and from a remuneration perspective.”
The Alphinity Australian Share Fund, run predominantly by former AllianceBernstein investment managers had strong one-year annualised returns of 10.33 per cent, ahead of AMP Capital’s Enhanced Index Share Fund at 8.98 per cent and was the most consistent performer of the compared boutiques.
