Boutique asset managers launch GBAM to help compete with global players
Boutique asset managers in Spain have formed a self-help group to enable them to compete more effectively internationally with more dominant global players, and to foster cooperation among themselves to increase their competitiveness.
The boutiques have agreed to form an association which they have called: “Group of Boutique Asset Managers” or ‘GBAM’.
The inaugural meeting of GBAM was led by March Gestión de Fondos- the asset management arm of the Spanish private bank, Banca March, and supported by other attendees from LatAm, Europe and Asia.
The founding members of GBAM include:
Bestinver – Spain
Banif – Portugal
Lampe – Germany
Banca Sella – Italy
Mutuactivos – Spain
Corpbanca – Chile
Banca March – Spain
GBM – Mexico
Having set-up the organisation GBAM is now seeking other ‘like-minded’ boutiques, a statement said. Others who expressed an interest included two asset managers from UK, one from Asia and one from Switzerland.
The groups said the following definition of a “boutique”, taken from a report by State street entitled The DNA of a boutique provides a framework:
“When it comes to describing a boutique asset manager, there is no one-size-fits-all definition. Boutiques come in a variety of structures, forms and sizes. Some are start-ups, while others have been in business for years. They can be independent entities or housed within large organizations. A boutique’s client list may be dominated by institutional relationships or tilted toward high-net- worth and/or family offices. The term “boutique” is itself sometimes disputed, with some firms preferring to describe themselves as “specialist” managers. There is no easy way of defining boutiques by assets under management.”
(From: The DNA of a boutique – Vision Focus – State Street 2012)
The formation of GBAM is in response to the increasing polarization of the asset management world between big asset managers with a broad range of capabilities and small specialist boutiques with a limited range of investment strategies.
One aspect of this, known as the Barbell effect (often highlighted by commentators), is the ability of those managers caught in the ‘middle ground’ to survive. World class boutique asset managers whose voices (and successful investment strategies) are less well heard in world markets, given the dominance of powerful, well resourced, global players, and so sometime struggle to survive.
In response, GBAM aims to foster cooperation among like-minded boutique or specialist asset managers. Those who met in Spain all share a performance driven culture, and are generally recognised for their talent, creativity and entrepreneurial spirit.
Crucially, all want to expand their businesses internationally, and face similar challenges in doing so on limited resources. By coming together to share information, members will be in a better position to do so.
March Gestión de Fondos CEO José Luis Jimenez (pictured) noted: “Asset management is an exciting business given the levels of competition amongst the firms – large and small. And all of us seek to offer the very best strategies to investors. But while the boutiques represented in GBAM are happy to compete with the very best, we have to appreciate that the investors around the world may not be in a position to access boutiques managers as easily as the big firms.
“On the one hand small players cannot be available everywhere and on the other, as a consequence of the crisis, many distributors’ prefer well-known names because it is easier to pick up a strong brand recognised by investors”.
He said during talks over the last 18 months he realised small managers faced the same opportunities and threats. “It therefore became obvious that in order to take advantage of these opportunities boutique managers do not have to continuously ‘reinvent the wheel’ by each seeking the same information. Instead they can tap into a trusted network of smart people who can help them take a big jump forward in the development of their business.”
“GBAM is not interested in involving itself in lobbying or competing with our national or international trade organizations. Rather, it is just a group of like-minded people who want to discuss important things in an open way and exchange ideas – our only goal being to improve our businesses on behalf of our clients and partners.
He said he believes excellent world class boutique mangers can grow, even in a sector dominated by big players, providing they can offer greater added value.
“Performance plays a critical part, but equally being the first to discover new and interesting investment propositions or the strong alignment of interest that boutique managers have with their clients, is an attractive proposition,” said Jimenez.
GBAM seeks to:
• Develop a network to hold discussions about important business issues faced by boutique managers – strategy, products, markets, clients, etc
• Improve by sharing experiences and best practices in all areas of asset management (research, portfolio management, risk control, marketing, etc.
• Get a better understanding of our respective markets regions to enhance distribution.
• Get a larger recognition for the role of the specialist manager in marketplaces around the world through social media, media relationships, forums etc.