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Boutiques have edge in difficult markets

Thames River co-head of multi-manager Robert Burdett claims that fund boutiques are best equipped to outperform in challenging conditions.

Speaking last week at a Thames River multi-manager seminar, Burdett said boutique funds typically outperform bigger fund management companies in volatile markets.

He said: “The whole orientation, governance and sales of boutique fund houses is to support fund management activity whereas in bigger organisations it is to control activity.

“Boutiques should do better in difficult market conditions because they have flexible controls which support the performance of their managers.”

He claimed that boutique managers are usually more experienced and less restricted than managers in bigger investment houses.

Burdett said: “They generally have a limit to asset capacity, meaning they have smaller, more nimble portfolios. They will not be afraid of distancing themselves from any benchmark, are more willing to use cash and other methods of protecting the downside and have far higher incentives to perform well as they are more aligned with the end investor.”

However, he warned that boutiques are vulnerable to unexpected departures and their managers can be saddled with unexpected operational responsibilities which can hinder performance.

Burdett identified hard commodities as a multi-year trend but that warned that soft commodities could become the next dotcom bubble. He said there are opportunities in emerging markets but he is bearish on the Middle East and North Africa. He said: “It is a very volatile market where you can make a lot of money but also lose a lot too.”

Worldwide Financial Planning IFA Nick McBreen says: “Boutique managers have a pretty free hand in what they do. They can look more bro- adly outside the box for opportunities in areas where other managers may not be able to.”


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