Boutiques beat index and non-boutiques over long-term
Boutique investments managers have outperformed non-boutique managers and indices over the past twenty years according to wide-range research conducted in the United States.
The research, released by Affiliated Managers Group (AMG), found the average boutique fund manager outperformed the average non-boutique in 9 out of 11 equity product categories, by an average annual 51 basis points and investing solely with a boutique would have created 11 per cent greater wealth for clients over the last twenty years.
Furthermore the average boutique strategy outpaced its primary index in 9 of 11 equity product categories, by an average annual 141 basis points after fees.
At the same time top-decile and top-quartile boutique strategies added 1,133 basis points and 589 basis points, respectively, on an average annual basis after fees as compared to their primary indices.
AMG chief executive and chair Sean M. Healey said the difference between boutiques was less marked with top-performing boutiques adding 55 basis points more value than poorly performing boutiques detracted on an annual basis. He said this illustrated "that these strong returns were not simply a function of higher risk".
AMG found that boutiques had a number of common core characteristics including principals with have significant, direct equity ownership and a long-term orientation, an entrepreneurial culture with a partnership orientation and an investment-centric organizational alignment.
"The primacy of a boutique investment manager lies in its focused, entrepreneurial culture and ownership structure, with principals maintaining significant, direct equity in their business," Healey said.
AMG is a global asset management company with equity investments in boutique investment management firms.
The research analysis incorporated data from more than 1,200 investment management firms and nearly 5,000 institutional equity strategies and analyzed rolling one-year returns for the trailing 20-year period ending December 31, 2014, across 11 broad institutional equity product categories, on a strategy-by-strategy basis.
AUTHOR
Jason Spits
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