FUND BOUTIQUES & PRIVATE LABEL FUNDS: Fund Boutiques, Think Tanks and Investor Relations – “Art”, Fans and the Treasure Island (Comment, Markus Hill)

“I have no special talent, I am only passionately curious” (Albert Einstein). This joy of discovery can be found in many personalities in the fund boutique segment. There you will find many independent minds with extensive know-how and (contradiction!) extraordinary talent. Many of the fund managers may not like to hear it – the proximity to “artistry” is obvious. If one generously assumes that fields such as economics and asset management, for example, are not “drawing board knowledge fields” but still have many undiscovered mechanisms of action, then one approaches this daring characterization. As long as not all the regularities have been discovered here, there are opportunities for independent talents who offer added value in the area of investor education in addition to performance. Where is the interface to Investor Relations? Which formats are often used?

Think Tanks and “Citizen Education

Many of the so-called think tanks are often not primarily associated with the field of investment, they are often located in the general area of economics and politics. Examples: Institute of the German Economy Cologne e.V. (IW), Institute for World Economy at the University of Kiel (IfW), Friedrich Naumann Foundation, etc. Many of these institutes fulfill a valuable function, acting as catalysts in the area of “diffusion of knowledge”, for example in the named subject areas – of course, the framework is much broader concerning all think tanks. The interested absorption of this knowledge requires responsible citizens. Why? For each of these institutions, it is advisable to consider the respective “agenda” of the institutions. Who publishes what and with what interest? This seems to be natural and does not pose a problem. You just have to do your homework. Seen positively: This information is presented transparently and is also critically discussed in the media. Society benefits from the constructive discussion that these institutes make it possible for the interested public. As one of many sources of information, the added value is created.

Fund boutiques and investor education

Detached from the above-mentioned structures, many other forms of think tanks have emerged. Similar to the buzzwords family offices, fund boutiques or impact investing, it appears positive, creativity-promoting that all these terms are still in the debate at the stage of the discussion on the sovereignty of interpretation, see also the committed discourse on “sustainability”. Particularly in the area of more commercially oriented addresses in the asset management segment, there are interesting addresses that make a transparent effort to provide investor education. Addresses such as FERI Cognitive Finance Institute and Flossbach von Storch RESEARCH INSTITUTE, as well as “hybrid think tanks” such as Kiel Economics, should be mentioned here. In the shadow of these so to speak institutionalized houses, one could look at some other addresses that operate investor education without being able to advertise directly with an institute label. Addresses such as ACATIS, DJE, Lansdowne Partners Austria, Eyb & Wallwitz, and sentix, among many other addresses, strive for additional input for investors in investment decisions – where the focus is not on pure product advertising. Some houses act as portfolio managers (fund advisors) themselves, some wear several hats, so to speak (investor, portfolio manager, “incubator” etc.). Every address finds its fans, so to speak, and every pot also has its lid.

Treasure Island – Newsletter, White Papers, and Webinars

Many fund boutiques naturally pursue an interest in selling their products (funds). However, many of these addresses are aware that the constant publishing, posting, and sending of pure product information (Who reads all the mails with attached fact sheets on the investor’s side?) is meeting with increasingly sparse interest: Information overflow, besides, there should be databases and other sources of information that prepare this seemingly “hard” information about funds in an understandable, independent way and put it into context. Only a certain proportion of asset managers manage to create added value here. A lot of feedback from investors results in an interesting picture, for example, webinars: Often used by fund selectors, information is often given in private: “I organize product information myself anyway, the macro view of the manager is interesting, then I disengage”. This type of feedback corresponds with the great interest in added value information on the investor side: asset allocation – justification, alternative assessment of market scenarios, interesting specialist conferences or webinars with “information-above-the-plate”, views of fund managers, who, in addition to the current portfolio manager view, can discuss interesting additional aspects on these topics, as one might have had many other interesting “hats” on one’s head before the portfolio manager career (analyst, banker, publicist, family officer, etc.). A treasure island that may not have been discovered by many investors in the independent houses is certainly worth a deeper look: newsletters, webinars, and white papers on selected topics!

Personality, know-how, and skin in the game

Independent asset managers live in a different world compared to corporate experts. Nassim Nicholas Taleb already addressed this issue indirectly in the book “The Risk and its Price – Skin in the Game”. Ideally, decisions are made by people who can also experience the effects of the decisions via a direct feedback loop: There is a difference between analyzing things, describing them, and making them public without practical actions being linked to the results of my analysis. Independent asset managers usually appear under their name, building up a personal track record with their fund. By continuously communicating their world view to markets, asset classes, timing decisions, or via rule-based systems in fund management (Doesn’t every fund manager have their rule-based system – implicitly or explicitly described?) they make themselves “vulnerable”, transparent and measurable. He has Skin in the Game! No serious fan of fund boutiques claims that each of the independent managers beats the market and the “big guys” at all times. It is well known that the perfect manager, who has all the others with his “objective” portfolio management results, has fortunately not yet become reality. As long as this is still the case (solution: AI approaches in 2050?), there are a lot of interesting minds to discover in the boutique segment, with interesting know-how and interesting personalities. Provided that the own approach shows long-term positive results for the investors, the circle closes here: “In the design, there the talent shows, in the execution the art” (Marie von Eber-Eschenbach).

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