It makes sense for independent asset managers to invest in boutique funds as their interests are aligned.
This is according to Markus Bamert, a fund selector at Zurich-based Lenox Capital (Switzerland), who talked about his most recent fund bets to Citywire Switzerland's sister website Citywire Selector.
'They [boutiques] tend to concentrate on a particular investment strategy, which prevents expansion purely for the sake of growing AUM, with the corresponding build-up of administration and internal politics.'
The asset manager is looking for fund managers that have an investment strategy in place for a full market cycle and he avoids aggressive beta players.
As a result, the company can stay invested with the same funds for many years and has a fairly stable geographic asset allocation.
'For a long time, we have generally focused on funds without a large exposure to financials, as the unresolved leverage and debt-issues seem more important to us than the geographic allocation.'
Bamert said one of the firm's typical, broadly diversified 65% equity mandates invests 5% of its entire portfolio in two eurozone-focused funds: Oddo Avenir Euro and Montpensier BBM.
'The former has no exposure to financials and focuses on the cross-border expansion of mid-sized companies.
'The latter works with four sub-strategies within the portfolio and does have some exposure to financials, which is exceptional for us.'
Another 5% is invested in the Greiff Special Situations fund, a low-volatility strategy with a primary focus on Germany’s highly regulated merger market, as well as the Schroder European Alpha Absolute Return fund.
'With such diversification, our allocation in Europe remains stable in spite of intermediate changes in the market environment.'