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Comment: Fund boutiques and family offices – Hermann Hesse and the „USA approach

The real, good has never been fashionable, but it is alive (Hermann Hesse). Fund boutiques have now established a sustainable position in the fund industry. Regardless of current positions in performance hit lists: the special qualities of this type of entrepreneur are appreciated by many semi-institutional and institutional investors. It is not only family offices and asset managers who appreciate the special expertise. What are typical characteristics of fund boutiques? Why should a classic institutional investor perhaps increasingly seek professional dialogue?

USA approach – quality and long-term thinking

Independence (U)

An independent position is a classic feature of fund boutiques. Due to their personal motivations, many founders in the boutique sector in particular have turned their backs on „large companies“. Autonomy in decision-making and the decoupling from pure profit thinking are often cited as drivers. In the meantime, many intermediate forms have emerged and the market is developing. Of course, there are also the „boutiques within the group“. Here, one can often observe that there are also movements to strive for independence in pure culture again in the end. Many models, although a great deal of competition is welcome.

Specialization (S)

Many of the independent asset managers are characterised by a high degree of specialisation. Investment styles, asset classes and investment approaches and their „personal“ combination by the manager determine what is special. With all the advantages and disadvantages – being true to one’s own style can also mean crossing deep valleys. The value manager, who remains consistently committed to his cause, is reminiscent here of the classic German medium-sized company („hidden champions“), who thinks in long cycles.

Authenticity (A)

Owner-managed fund boutiques are happy to do what they do, and in the best case also excellent. The decision to be independent is often comparable to the motivation of many classic start-ups: to do what they are convinced of. This conviction goes hand in hand with the belief that one can also survive in the market in the long term, as one’s own specialisation forms an „economic moat“ (value investing) or a USP (competitive advantage), so to speak. In the investment sector, the special situation here is that the „whip of transparency“ is at work in the liquid fund sector. Fund owners have the daily right of redemption for fund units if they are not satisfied. The sense and nonsense of this short-term thinking can be discussed in depth and in a productive manner elsewhere.

Consequences – family offices and „boutique patronage

Visibility and communication are closely related to the exchange of ideas and the intellectual pleasure of „professional growth“ together. The players on both sides of the industry – product suppliers and investors – can be recommended to seek contact time and again. Contact here does not mean on the part of the product provider: „Shoot fact sheets into my mailbox and then bombard me with calls“. Very few people, in this case investors, like to be seen merely as a means to an end. Due to their specialisation, fund boutiques without great earnings pressure can urge themselves as ideal discussion partners for institutional investors through competence. To be fair, one can get the impression that many fund boutiques could expand their investor communication.

Conclusion

The Family Office has for years been very receptive to the needs of independent professionals. It is not without reason that many of these investors are themselves involved in launching their own funds or in the seeding of new fund concepts. The „little ones“ find a hearing here in a very constructive way: Many years of expertise are recognised, the exchange of ideas is appreciated and also financially recognised: Supply and demand find each other in a pleasant way!


Source: www.institutional-investment.de
Foto: www.pixabay.com

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