The lure of boutiques returns

Boutique fund managers may have struggled to survive through the worst of the global financial crisis, but they remain strongly attractive to investment professionals looking for a change of scene, according to new research released by Standard and Poor’s (S&P).

The research, released on Friday, said that 26 per cent of the investment professionals who had departed mainstream managers had gone to boutiques — compared to just 12 per cent who had moved to mainstream managers.

It said that a further 31 per cent were either still in transition or had yet to announce a new role.

The data is contained in S&P’s so-called ‘Musical Chairs’ report, which examines the movement of key investment personnel.

According to S&P head of fund research Leanne Milton, the migration of personnel towards boutiques appeared to be based on being in charge of their own destinies and achieving financial rewards through equity ownership.

“However, moving to a boutique does have its risks,” she said. “The institutional model has some strong compensating advantages, such as greater financial security, access to significant resources and systems, career development and the responsibility that comes with managing substantial portfolios and teams.”

The S&P Musical Chairs report revealed the impact of the churn in the funds management arena, finding that six out of 10 of the funds which suffered departures during the third quarter found themselves being re-rated — while 14 were placed on hold.

It said that 83 per cent of departures had been from three-star and four-star rated funds and that 70 per cent of the investment staff who departed had more than 16 years of experience.