The UK will see a proliferation of boutique fund management groups as the bigger houses struggle to hold on to their stars, according to Liontrust co-founder Nigel Legge.
Speaking at an IFA roadshow – alongside Close Fund Management and Rathbone Unit Trust Managers – Legge said the recent wave of fund manager departures from big investment companies illustrates that top-flight managers prefer to work in smaller companies.
Legge also highlighted that barriers to entry within the industry have fallen in recent years, providing more opportunities for fund managers to start their own businesses.
Liontrust believes that easier access to seed capital for start-up firms and more information channels are opening the door for smaller companies.
Contrary to the view that increasing consolidation will shrink the industry, Liontrust believes that it will continue to fuel the flow of start-ups.
Marketing director Jonathan Harbottle says: “Consolidation in the industry will cause a proliferation of people moving out of the big groups and starting up their own businesses.
“Also, by definition, new companies have lower overheads today. We outsource anything that does not touch the client, such as fund accounting and valuation functions, so, as a new entrant, you do not burden yourself.
“The trick is to differentiate yourself in what is an extremely competitive industry.”