Booming boutiques break $100bn mark

Assets run by employee-owned fund managers rose by 33 per cent to reach $100 billion over 2004-05, research has revealed.

The annual Boutique Funds Management Survey, conducted by Melbourne-based consultancy Dr Steven Vaughan & Associates, also estimated that there are now 100 employee-owned boutique fund managers operating in the Australian market, excluding hedge funds.

The proliferation of boutiques is a worldwide trend according to Steven Vaughan, whose consultancy sources international intelligence through a partnership with Callan Associates.

“This is evidenced by the number of offshore employee equity merger and acquisition transactions over the past 12 months, the decline of the mega-takeover, and the organisational reengineering of some of the larger global investment firms,” Vaughan said.

While boutiques have been growing since the start of the century, Vaughan said it was finally having demonstrable effects.

The bank-owned and insurer-owned managers had responded to the lightning success of boutiques like 452 and MIR by replicating boutique equity structures in their own businesses.

“This is a positive sign for the industry and investors who use managed funds, and should lead to an improvement in the quality of funds management,” Vaughan said.

However, the old guard would have to keep playing catch-up as existing boutiques further incentivised their structures.

Vaughan said most of the firms surveyed “now espouse a democratic equity ownership philosophy”.