Last Rites for Boutique & Emerging Fund Managers?

You’ve probably seen the same news-flow we have – the last few months has been brutal for smaller, newer, emerging & boutique fund managers. In January alone, firms such as Liontrust, Deuterium, Ardevora, Fundsmith were all in the news for the wrong reasons. According to Funds Europe, one in six asset and wealth managers will disappear or be acquired by 2027.   

Those that didn’t close are bleeding assets  

Almost all asset classes are impacted

Reputations & fortunes shredded

New funds in North America, UK and EU are not raising money

And, as we said in a prior post – there are well over 1million funds out there already all saying ‘pick me’

So, it’s game-over then.

No darn way.

We love boutique land, always have, always will. We’re a proud boutique and smaller fund firms from all over the world are our sort of people, our tribe. So, we’re not taking this lying down, we’ve identified many of the reasons for the problem and more importantly, we have some time-tested solutions.

But, we better start with unpacking the challenges so strap yourselves in folks.  

Concept

  • Find the most ‘glass half empty’ person you know in finance and ask them if your team & fund idea is truly different, innovative and has immediately identifiable edge. If the response you get is middling to negative, don’t launch. Without a clear edge, how will you compete with the 1 million+ funds already out there?    

 Start-up capital

  • Tempting isn’t it to focus your start up team only on getting regulated and the fund launched. Even if you’re Bobby Jain this route won’t raise assets. Before you hire a regulatory lawyer, sit with your founders and figure out your distribution strategy and its budget. Who are your target investors, where are they, who are your sales people, how much do they cost, how will you market your firm, which conferences will you attend, will you appear on podcasts and TV…
  • And if the amount of founder capital isn’t enough to cover everything, double down and put more in or get some seed GP financing in the door.

Performance

  • Many fund managers believe performance to lie at the heart of asset gathering. Not any more folks. Consider this; we know 100’s of fund managers with super numbers and no AUM. But we also know 100’s of firms with multi-billion AUM and distinctly average performance. The difference is always down to the discernible edge and a deeply resourced sales & marketing function.      

Fees

  • Most emerging fund managers in the alternatives space charge far too much. 2 & 20 or more for a new fund run by a new firm? Really? Install a share class for early adopters at less than half this fee level for a period and make a lot of noise about it. Let’s remember that all that money flowing out of boutique land mostly finds its way into uber cheap ETFs. Rightly or wrongly, this is the fee competition we are all facing & high fees will only undermine that early performance. 

Stories not Stats

  • When’s the last time you called a friend to discuss a stat you just found? Much more likely that you told a story or an anecdote. Stories always win out over charts & data.  

Sales

  • Less than 10% of early-stage funds have dedicated & staffed sales and marketing. Think about it, before the track has been created and when the firm is barely known, firms conclude that they cany afford salespeople or sometimes distribution partners…the definition of crazy.   
  • Most PM’s are weak marketers and most sales people can’t run money – accept this, solve it and thrive.  

Monthly Newsletters & LinkedIn

  • Almost no-one reads them and they went out of fashion in 1998. We often see small fund management teams spend upwards of 5-10 hours per month writing and editing their monthly newsletter. Frankly, a colossal waste of time.  Spend every minute of that time on LinkedIn and then triple the time budget and the results will astound you. Every boutique fund manager’s day should start and end with LinkedIn connections and posts. By all means, write a pithy weekly paper but post a shortened version of it on LinkedIn alongside telling stories about the challenges you face, your earliest clients, your new team members…        

Audio/Video/Stills 

  • When you think about writing something, ask yourself, could you record it instead? Photo, video and audio messages get multiple amounts more traction than text. This is why every post you’ll see from us always has an image or video attached.

Every single week of the year we help fund founders address and solve these issues. We use decades of lived experience that includes the trial and error of marketing our own funds and mandates in our own asset management firms. 

If you know someone who would benefit from a free taster call with our team, please do say hello and introduce them.