AMG Study Shows Boutique Investment Managers Have Demonstrated Consistent Outperformance Over the Past Two Decades
AMG Study Shows Boutique Investment Managers Have Demonstrated Consistent Outperformance Over the Past Two Decades
June 15, 2015
Key Highlights from the Study
The analysis found that over the last twenty years:
- Boutiques significantly outperformed non-boutiques: The average boutique outperformed the average non-boutique in 9 of 11 equity product categories, by an average annual 51 basis points. Investing exclusively with boutiques across all categories would have created 11 percent greater wealth for clients over the last twenty years, as opposed to investing with non-boutiques.
- Boutiques delivered significant value as compared to primary indices: The average boutique strategy outpaced its primary index in 9 of 11 equity product categories, by an average annual 141 basis points after fees.
- Top-performing boutiques generated exceptional excess returns: Top-decile and top-quartile boutique strategies added 1,133 basis points and 589 basis points, respectively, on an average annual basis after fees as compared to their primary indices.
“Our comprehensive study demonstrates that boutique investment managers
have outperformed non-boutique peers and created significant value for
clients over the long term,” stated
“In addition, top-performing boutiques added 55 basis points more value
than poorly performing boutiques detracted on an annual basis,
illustrating that these strong returns were not simply a function of
higher risk,” said
Several core characteristics position boutiques to deliver consistent, superior long-term investment performance, including:
- Principals have significant, direct equity ownership, ensuring alignment of interests with clients;
- Presence of a multi-generational management team, fully engaged across the business;
- Entrepreneurial culture with a partnership orientation, which attracts and retains the most talented investors;
- Investment-centric organizational alignment, including careful management of investment capacity; and
- Principals have a long-term orientation and are committed to building an enduring franchise.
“The primacy of a boutique investment manager lies in its focused, entrepreneurial culture and ownership structure, with principals maintaining significant, direct equity in their business,” Mr. Healey added. “We believe that these core characteristics give boutiques a competitive advantage in generating consistent outperformance. Our research clearly demonstrates the significant value that boutiques have generated for investors over an extended time horizon.”
To review this analysis in full, download “The Boutique Premium” at www.amg.com.
Methodology: The Boutique Premium
The study incorporated data from more than 1,200 investment management
firms around the world and nearly 5,000 institutional equity strategies
comprising approximately
The classification of firms as either “boutiques” or “non-boutiques” was
based on AMG’s proprietary analysis, while the MercerInsight® database
was utilized for return data. Primary indices for comparison included
MSCI Emerging Markets, MSCI World, Russell 1000® Value, Russell 1000®
Growth,
The study estimated boutique net excess returns as compared to indices – incorporating boutiques’ available published or “rack” fee rates in the MercerInsight® database – in order to assess net value creation for investors.
The classification of investment managers and their corresponding
strategies as “boutiques” in the study was based on four criteria.
First, principals were required to hold a significant amount of equity
in their own firms, defined as at least 10 percent ownership. Second,
investment management was the sole focus of each firm; investment
managers captive in broader financial services platforms were excluded.
Third, firms with assets under management greater than
About AMG
AMG is a global asset management company with equity investments in
leading boutique investment management firms. AMG’s innovative
partnership approach allows each Affiliate’s management team to own
significant equity in their firm while maintaining operational autonomy.
AMG’s strategy is to generate growth through the internal growth of
existing Affiliates, as well as through investments in new Affiliates.
In addition, AMG provides centralized assistance to its Affiliates in
strategic matters, marketing, distribution, product development and
operations. As of
Certain matters discussed in this press release may constitute
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Source:
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Alexandra Lynn
Selene Oh
(617)
747-3300
ir@amg.com
or
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