Fund selectors discuss boutiques and fund sizes
The most efficient size of fund and the question of whether to prefer large fund houses or boutiques is discussed by selectors such as Bruno Pennino at FinecoBank and Ansgar Guseck at Sauren.
Specialise for success
Name: Bruno Pennino
Title: Headof investment solutions
For your funds platform, do you prefer large funds houses or boutiques?
Fineco favours quality, regardless of the size of the asset manager. Nobody is a master of all trades.
What is important is to understand the characteristics and the management style of each manager, making best and most appropriate use of them at the right time.
Well-diversified portfolios can benefit from both the big funds houses, generally more solid and structured, as well from boutiques, which tend to be more flexible and more dynamic.
To ensure clients are always offered high-quality products, you have to have the best managers who are specialists for each region, sector and style.
In that sense, those that do not have a multi-brand offering have greater difficulty justifying the choice of manager and performance of the product.
Understanding private equity
Name: David Currie
Title: Chief executive officer
Company: SL Capital Partners
Why have you financed a research chair at Oxford University’s Private Equity Institute?
SL Capital Partners has committed financial support to the fellowship to enhance the Institute’s research activities and additional resources to assist the programme of education, networking and debate.
Private equity as an asset class has entered a period of increased scrutiny and uncertainty, and the Institute occupies a pivotal position as an independent research entity whose insights have significant authority and impact.
The investment in the fellowship provides a platform for research into areas such as performance, benchmarking, portfolio construction, how value is created and the changing regulatory framework.
SL Capital and the Institute believe that the partnership can lead to an enhanced understanding of private equity for practitioners, investors and the general public.
Large fund perils
Name: Ansgar Guseck
Title: Senior partner
Is fund size naturally an enemy of manager performance?
When a manager identifies a good idea in a $100m market-cap company and is running a $200m fund, he may build a 2% position, as it would mean buying 4% of the total company.
But when running a $2bn or $20bn fund, you have no chance of buying that stock. The universe of investable assets shrinks.
It would be just too much effort to do the research, but building only an insignificant position.
Buying, nonetheless, means moving the price, so there will be slippage both on the way in and out.
In consequence, the best ideas will be diluted while more position is added to the portfolio as it grows in size.
Additionally, you see managers at large houses running more than $25bn, and spending 80% of their time marketing and meeting clients. We want managers who are running their portfolio for 80% of the time.