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‘Boutique’ battle is breaking out

Multi-manager T Bailey is delighted that the Credit Suisse incubator fund is endorsing its own views on the benefits of holding boutique funds but is critical of its “artificial restrictions” which exclude larger, more established funds.

The Credit Suisse fund aims to identify unrecognised talent by focusing on smaller funds with assets not exceeding £100m at the time of investment.

T Bailey says it has been taking a similar approach within its multi-manager portfolios for years, having been an early investor in Artemis funds and the Saracen growth fund.

Although T Bailey is pleased that investors are starting to understand that boutique funds have the potential to deliver stunning performance, it feels it is unnecessary for multi-managers to focus solely on boutique managers, particularly in areas where bigger funds are perform- ing well.

Credit Suisse says that funds under £100m consistently dominate the tables, mak- ing the restriction a good discipline for its incubator fund.

T Bailey has also hit out at bigger fund management groups such as M&G and Old Mutual which it claims want to be seen as boutiques. In T Bailey’s view, boutiques have to be small, have a narrow focus or product range or to be owned by individuals rather than being a listed company.

T Bailey co-fund manager Jason Britton says: “Boutiques are popular at the moment as people have woken up to the concept that smaller assets can deliver stronger performance. It is quite amusing that some of the bigger groups – M&G and Old Mutual – have come to us saying they are boutiques.

“Because everyone wants to be a boutique, some multi-managers are focusing on boutiques alone. But there are some very good large funds out there, some of which are as good as you can get. Why place artificial restrictions on choice?”

Credit Suisse Asset Management joint head of multi-manager Robert Burdett says: “If you look at the statistics on funds below £100m they absolutely dominate the first quartile each year – and this is without doing any qualitative research. These are restrictions that will we think will do very well for our investors.”

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