Boutique investing has some major advantages

Peter Armitage

Up until the last two decades, few investors would risk entrusting their assets to a small management firm, preferring to leave the task of growing their wealth up to larger, established asset managers.

However, smaller, independent firms – called boutiques – have been rising since the 1990s, mak- ing inroads into the market share dominated by life and bank-owned asset managers. They have become popular for those looking for a different slant on investment.

At the end of 2016, there were 126 small, independent asset management firms in South Africa, with about R2.4 trillion of assets under management (AUM) – 47% of SA’s total AUM. And the majority of AUM by boutiques were with the top 10 in SA.

Boutique firms have turned their smaller size into an advantage. Dealing with smaller investments enables boutiques to react more nimbly to changing market dynamics. They’re thus able to take advantage of opportunities or reduce risk for clients.

In the cases of EOH, FBR, ASC and DAW, for example, boutiques were able to sell out of these positions before the stock values fell to much lower levels. Whereas small and mid-cap stocks usually don’t add significant value to large managers’ funds, they can have a meaningful impact for boutiques.

Many of SA’s most respected investment professionals have moved away from large firms to establish themselves independently and boutique owners often invest their own wealth into their funds.

Peter Armitage Anchor is CEO at