One of the funds, the global boutiques fund, aims for growth by investing in funds managed by companies that Potter and Burdett view as boutique in nature. It will be diversified by geography, fund management group and by fund.
Thames River says investing in funds managed by smaller investment houses is a key part of its multi-manager strategy, aimed at getting to the best managers early in their careers. It says boutique companies and their funds are usually established by small teams of fund managers who have the belief and conviction in their abilities.
Although there is no set definition of a boutique, Potter and Burdett believe boutiques share certain characteristics. Boutiques are concerned with absolute returns and are not constrained by benchmarks or investment committees. They focus on a small number of asset classes, while the fund managers are highly motivated and performance driven because they usually invest in the business.
Thames River says many multi-managers depend heavily on quant screens when selecting managers but Potter and Burdett differ in that the most of their fund selection is qualitative and forward looking rather than basing investment decisions entirely on past performance.
The team has devised a scoring system to assess managers on factors such as working environment, leadership and fund size. This system allows the team to compare past and present scores and also compare funds.
Potter and Burdett have worked together for over 11 years and ran a similar boutique fund at Credit Suisse, which should stand them in good stead with this fund.
One of the potential problems for advisers is whether experienced fund managers can manage money in the same way in a different environment following a change in employer. As multi-managers, Potter and Burdett may have an advantage in that they analysed Thames River as a business and invested in its funds while at Credit Suisse, so they will know how it works behind the scenes.
However, Thames River has not been a major player in the retail market and may need to rely heavily on the reputations of Potter and Burdett to build its profile.