Boutiques’ share on the rise

Boutiqueand employee-owned Australian investment managers may account for as much as 25 per cent of the domestic funds management market by the end of the decade, according to new research by Vaughan & Associates.

“In our earlier 2001 review, we forecast that employee-owned investment managers would achieve a market share of over 20 per cent by the end of the decade,” Vaughan & Associates principal Steven Vaughan says.

“[However] we now think this is conservative. While forecasting specific market shares is difficult, we think it is possible that a 25 per cent share will be exceeded by this time,” he adds.

Vaughan says there is now no doubting that the employee-owned boutiques “are here for the long haul”.

Following the group’s initial research last year, Vaughan says the market’s appetite for opting boutique managers over their institutional counterparts has risen and that employee-owned firms “are now generally recognised as viable competitors to the more well-known brand names”.

However, he adds that while growth in the sector was strong, not all firms will succeed, as alpha generation remains the most challenging issue facing the whole industry.

With $13.5 billion in funds under management — up from $9.2 billion in 2000 — boutiques continue to build on their success in competing against larger managers for institutional mandates.