Challenger offers boutique first

Challenger will next week roll out what it claims is the first fund to offer retail investors the opportunity to invest in individual boutique fund managers.

Challenger Boutique Choice offers six Australian equity funds selected with the assistance of research by William M Mercer, including five funds managed by an individual boutique manager and one fund of funds which includes equal share in all five.

The launch of the fund follows a flurry of activity in the boutique end of the market. Dr Steven Vaughan has recently researched a number of boutique managers, while van Eyk Research is understood to be on the verge of releasing a major report on the market in the next few weeks.

It also follows the launch a few years back of the AM Corporation boutique manager fund of funds, and the establishment of a boutique manager division at Advance Funds Management about a year ago.

The Challenger fund will be initially distributed through master trusts and wraps, and will be priced competitively to other funds distributed through master trusts. Challenger’s head of master trust services John Hamer says there are also plans to offer the fund in a traditional retail structure further down the track.

Hamer says the fund is aiming to “uncover the next Maple Brown Abbott”.

“These are funds managed by people who have the added incentive of an equity interest in their businesses and don’t want the headaches of unit registry and call centres associated with retail offerings,” he says.

“They are entirely focused on maximising returns. Our fund aims to give investors access to some of that performance.”

The initial five managers to be included in the fund are Alpha Investment Management, Bell Asset Management, Jardine Fleming Capital Partners, JM Asset Management and Perennial Value Management.

Hamer says Challenger would have liked to have included more boutique managers in the offering but felt that if more than five were included it might dilute the fund flows to the individual managers. He says the group is considering adding a few more managers in about a year.