Multi-boutique benefits recognised
GLOBAL - Large asset managers have started shifting to segregated structures after realising the benefits of being multi-boutique, according to Fitch Ratings.
Global long-only players have seen smaller, sector specific managers win pension fund mandates and produce good returns whilst charging a competitive fee.
Amit Mathur, senior director, fund and asset manager ratings group, Fitch, said: "Although larger players can offer economies of scale, more nimble boutique managers can offer investors good performance, in alternative sectors, at a lower cost, as they do not have such overheads.
"By creating a structure to bring these new, specialised skills in-house, the larger players can diversify their product offering to a wider investor base.
"Once large managers looked to be good at everything and provide a complete package, but pension funds can now find focused solutions at a low cost."
Mathur said this global trend was set to continue with boutiques reacting to this competition by streamlining their processes and costs or acquiring other niche firms to offer a complete asset management product.
This trend echoes the legacy model adapted by BNY Mellon, which gives each section of the business complete autonomy to manage an overall $1.1trn in assets.
Ian Harvey, director, BNY Mellon Asset Management International, said: "We have no global CIO or style bias; each business can focus on its own process whilst benefiting from the company infrastructure.
"The structure provides low correlation between the separate businesses, this makes it attractive to other firms."
However, Steve Wiltshire, CIO, multi strategy solutions, Russell, said calling recent movement a migration was an overstatement: "There has been a trend towards this structure for a number of years, but the there has never been an agreement to what the term 'boutique' means.
"Some firms have always taken this approach, separating equities and bonds, for example, and it can be successful if well managed."
Wiltshire said some pension funds had actually returned to the multi-asset manager, popular several years ago. By contracting a single firm to allocate entire portfolios on a fiduciary basis, some pension funds were looking at their own liabilities rather than benchmark performance.
Amit Mathur, senior director, fund and asset manager ratings group, Fitch, said: "Although larger players can offer economies of scale, more nimble boutique managers can offer investors good performance, in alternative sectors, at a lower cost, as they do not have such overheads.
"By creating a structure to bring these new, specialised skills in-house, the larger players can diversify their product offering to a wider investor base.
"Once large managers looked to be good at everything and provide a complete package, but pension funds can now find focused solutions at a low cost."
Mathur said this global trend was set to continue with boutiques reacting to this competition by streamlining their processes and costs or acquiring other niche firms to offer a complete asset management product.
This trend echoes the legacy model adapted by BNY Mellon, which gives each section of the business complete autonomy to manage an overall $1.1trn in assets.
Ian Harvey, director, BNY Mellon Asset Management International, said: "We have no global CIO or style bias; each business can focus on its own process whilst benefiting from the company infrastructure.
"The structure provides low correlation between the separate businesses, this makes it attractive to other firms."
However, Steve Wiltshire, CIO, multi strategy solutions, Russell, said calling recent movement a migration was an overstatement: "There has been a trend towards this structure for a number of years, but the there has never been an agreement to what the term 'boutique' means.
"Some firms have always taken this approach, separating equities and bonds, for example, and it can be successful if well managed."
Wiltshire said some pension funds had actually returned to the multi-asset manager, popular several years ago. By contracting a single firm to allocate entire portfolios on a fiduciary basis, some pension funds were looking at their own liabilities rather than benchmark performance.
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