Institutional Asset Manager newsletter - "Market volatility intensifies demand for boutique managers"

Market volatility sparks greater interest in boutique asset managers

As the coronavirus vaccine roll-outs continue at speed and the pandemic begins to recede, there are new threats emerging to destabilise world order. Trade tensions are flaring between the West and China over the country’s treatment of the Uighur population and Hong Kong’s democracy. Meanwhile, Europe is facing a "vaccine war" as the European Commission threatens to ban exports of vaccines to the UK.
The asset management industry is not immune to the uncertainty. Outlooks are turning more pessimistic as research shows that institutional investment consultants’ 10-year return assumptions have fallen year-over-year for nearly all strategies, with commodities and fixed income strategies worst-hit.
Inflation prospects are also muddying the waters for managers and asset owners. Yields on US Treasuries surged above 1.7 per cent earlier this week on a sharp upgrade to US economic growth forecasts. The Federal Reserve’s stated intention to keep interest rates low for the next few years while buying bonds has led some fund managers to accuse the central bank of "deferring not deciding" the big questions.
Now might be a time to turn attention towards boutique asset managers, which often perform best in times when financial markets are volatile, outperforming larger managers and passive indexes. Asset management remains dominated by the "trillion dollar club" of mega asset managers, with an average of 87 per cent of all monthly investment flows going towards just 20 funds, according to EPFR. Ireland-based funds platform Mediolanum International Funds has earmarked EUR10 billion to invest with boutique asset managers over the next five years, with mandates already announced covering diverse strategies from technology to emerging markets equities.
Mediolanum says a razor-sharp focus on strategy, stronger incentives to outperform, and the ability to negotiate better deals are all reasons to back boutiques.
Madeleine Taylor
Editor, Institutional Asset Manager
maddy.taylor@globalfundmedia.com

Copyright © 2021 All Rights Reserved

About | Disclaimer