By Ross Kelly
LAST year it was the rise of the boutiques, now uniformity of style has emerged as the latest trend to hit the funds management industry, according to a fresh review of the Australian large cap equities sector.
Increased uniformity is the result of different investment styles converging, according to research house van Eyk’s annual Australian equities review, even though value companies continue to dominate the Australian market, as do quality value managers.
“Historically low market volatility and the bolstering of earnings of low quality value companies has blurred the line between companies with growth and value characteristics,” van Eyk head of research and ratings Suzanne Tavill said.
Tavill added that this effect is exacerbated by the Australian sharemarket’s small number and narrow distribution of stocks.
Consequently the report found little difference in return above benchmark between growth and value managers, she said.
“It emphasises the need for investors to have confidence in a manager’s capability, not merely focus on their investment style.”
Meanwhile, the report also found the unabated popularity of boutiques has forced larger fund managers to take a long look in the mirror and change the way they present themselves to investors.
“What we are seeing now are the ‘big brand’ fund managers restructuring their business models to become more ‘boutique-like’. They are leveraging their existing resources to offer more specialised funds and putting staff incentive programs in place to compete with the boutiques.”
As for the Australian equities sector as a whole, van Eyk has agreed with most analysts, predicting that performance will be weaker this year while volatility will be higher.
