Making the case for multiple choice
The single brand and multi boutique models both have their champions, but it will be the private banks who choose which is really in vogue
The multi-boutique or “village of boutiques” structure was once seen as a fashion statement on the fund management street. Salesmen who previously proudly carried the brand of a single bank on their calling cards had them reprinted to include 17 or so tiny logos, each portraying a different set of values and investment philosophies. This approach was pioneered by the fund management arm of BNP Paribas during the last decade. Since its merger with the funds arm of Fortis, BNP Paribas Investment Partners has gone even further down this route and there is clearly no turning back for the French bank. A top ex-Fortis investment strategist, Brussels-based William de Vijlder, has been put in charge of overseeing the investment policies of the very different teams, including specialist bonds arm FFTW, fund of hedge funds business Fauchier Partners and Nordic investment unit, Alfred Berg. Mr de Vijlder will check that every process works properly and make necessary changes. He will also be charged with the incubation of new boutiques to further broaden the array of strategies already available in the fund group’s bid for one-stop shop supremacy. Some houses have reported improvements in fortunes since adopting the new approach. Nordea, for example, opted to offer strategies from different, sub-advised boutiques for its Luxembourg-headquartered international business and has not looked back. The changes were made to exploit distribution openings, with sales staff finding it easier to sell different, unique strategies, with their own specific sub-advisers, who are readily available to sell their story to private bankers. Even Pioneer Investments, which recently swapped its top management in the European fashion capital of Milan, is joining the trend-setters by beginning to differentiate its various production units around Europe, rather than continuing to insist on one, unified face. Different thinking But it’s always good to have a dissenter in the ranks, particular when the new orthodoxy is disputed by BlackRock, the world’s biggest brand in fund management, which recently boosted its passive capacity with the addition of the BGI business. Sure, each BlackRock investment team is allowed its own investment process and philosophy, reflecting specialisms in small cap, quant or indexed management. But there is also an emphasis on sharing research and a single platform. The danger of the multi-boutique model is that it can create small fiefdoms, jealous of one another and unwilling to co-operate. The BlackRock, single brand model, persuades investment professionals to pool their ideas and work together, rather than encouraging elitism. Private banks and fund selectors – through their purchase of investment vehicles – will be voting regularly on which approach constitutes this year’s model.
