By Fiona Maciver
Top ranking boutique brands
Fund buyers’ perceptions and rating of European asset management brands are revealed in Broadridge’s Fund Brand 50 report where the top cross-border and bou¬tique brands are examined. Alongside the rankings of the groups, the report highlights some core differences in the relative significance of brand attributes between the cross-border and boutique players. In the latest findings, fund buyers placed a greater emphasis on local market knowledge and the stability of management teams in boutiques when compared to the larger cross-border managers. And, interestingly, as distributors and manufacturers adapt to the post-Mifid 2 landscape, the issues of fees and research transaction cost pressures seemed to weigh more heavily on boutique fund selec¬tion. Unlike the main brand rankings, the importance of price in the buying process increased.
Boutique players in the latest FB50 rankings had a distinctly local bias, with buyers seeking out special¬ists to capture untapped alpha opportunities. This was a theme that was reflected across the geography of managers represented in the top twenty. The top-brand was Lannebo Fonder, whose expertise in Swedish equi¬ties and recognition from fund buyers’ for relationship management helped it achieve the top spot for the fourth year in a row. Like last year, France dominated the geographic representation of managers with five groups in the top tier, closely followed by Germany and Spain, each with four representatives.
Independent managers are a relatively rare, but growing, breed in Spain with a steady flow of established names prepared to test their entrepreneurial flair and pulling power from past ‘star manager’ status at larger firms. While 2018 was a year of redemptions in the Spanish market, equity funds were surprisingly resilient to market volatility with boutiques the primary beneficiary, contributing to the brand ranking for a cohort of value investors: Magallenes, azValor, Catella Capital and Cobas. As explained by a Spanish IFA/Intermediary: ‘ We want to incorporate Magallanes into our provider list because of its specialisation and skill in the equity sphere, the good track record of its funds and the consistency of its investment process’.
Outlook for boutique brands
With no sign of market volatility abating, asset managers will have to contend with stiff headwinds, whatever their size. With a decidedly chilly feel in the air, we expect to see fewer equity-only players in next year’s boutique rankings, although the crème de la crème will continue to be in demand. Meanwhile, model portfolio providers and discretionary managers will be looking to add names that can contribute value to their portfolios, and to distinguish their offer from increased competition throughout the value chain. On the downside, increased costs of business and access to specialists through the multi-boutique business model is a threat to small independents. Following the success of Natixis, access via such multi-boutique houses could become more attractive for buyers seeking specialists but with the comfort and backing of a more significant operation, particularly in the wake of the Woodford Investment Management situation.