Lone Rangers: how have the boutique founders fared?
by Harry Brooks on Jan 23, 2013 at 12:45
We analyse the performance of five managers who have left the big groups behind to set up on their own.
Going it alone
There can't be many managers working for the big groups who haven't wondered what it might be like to set up on their own.
With no senior management to appease and no arbitrary goals to meet, it's easy to understand the appeal of opening a boutique. But how does the fantasy match the reality? Do the additional burdens of overseeing the whole operation offset the greater investment freedom?
To find out, we've taken a look at the performance of five managers who have made the leap. We've looked at their performance since setting up a boutique against a comparable period from their stretch with a big firm.
Under Rhenman's stewardship between August 1998 and April 2008 the Carnegie returned a highly impressive 634% in euro terms. In the two years shown in the graph above, however, the fund slipped into the red, although it marginally outperformed its benchmark's 14.7% decline.
The right-hand graph shows the impressive performance of Rhenman's new fund, which has returned 46.9% since it was launched, outstripping its benchmark.
Unlike the Carnegie fund, Rhenman's new fund is able to take short positions in stocks on which he has a negative view. Speaking just before the fund launched, Rhenman said he was confident this would boost returns: 'I think I can handle it well, because what you do as a long only manager is that you are basically avoiding weak stocks at all time,' he said. 'By being able to short we can leverage our own fundamental thoughts.'
Rhenman has clearly made a successful transition, having comfortably outperformed his benchmark over a meaningful period of time. It'll be interesting to see whether his longer-term performance can equal that from his time at Carnegie.
The graph above shows an unspectacular period for the Alpha Bond Plus P Cap fund, which missed the benchmark's striking rally at the end of 2008. Crastes had a strong run before this though, earning him a Citywire AAA rating in 2005, 2006 and 2007.
Craste's performance since his own boutique has been highly impressive, with his H2O Multibonds fund delivering returns of almost 25% since launch, far ahead of the benchmark's return of under 5%.
The fund manager has a fairly broad mandate for investment and can move between sovereign bonds, investment grade credit and the high yield market in order to find holdings.
Having got off to a slow start, with his new fund dropping 8% in 2011 as the fate of the eurozone hung in the balance, Crastes has really hit his stride over the past year.
Renaud's strong performance with the fund, reflected in the five-year return of almost 150% in the graph above, earned him a Citywire AAA rating in 2005-2006.
He left CCR at the end of 2007 to set up his own boutique in Paris called Mandarine Gestion, offering investors a variety of styles. The first fund Renaud launched, however, was similar in scope to the old CCR Valeurs fund, with a pan-European equity focus and his traditional value style.
The fund hasn't been able to repeat the original's impressive returns so far, losing just over 20% since launch, while the benchmark has fallen a more modest 7.35%.
Renaud's value style has been out of favour since he struck out on his own, and his fund has suffered as a result. Having reached the pinacle of a Citywire AAA rating during his time at CCR, he's currently without a rating from us.
MainFirst founder and managing director Hans-Peter Schupp launched his Fidecum boutique in 2008.
By then MainFirst had grown to 120 employees, and Schupp wanted to return to a smaller boutique atmosphere. In the four years shown in the graph above the MainFirst - Classic Stock Fund A returned some 80%, missing the benchmark's return of almost 120%.
The Fidecum SICAV - Contrarian Value Euroland fund has delivered more volatile performance since it was launched, but currently sits virtually where it started. Again, the benchmark's done better, delivering a 9.3% return over the same period.
Schupp made his name by avoiding the tech bubble at the beginning of the decade. The graph above doesn't paint his recent performance in the best light, but it was significantly ahead over 2010.
Under the banner of EM Quest Capital, Blackwood’s team, which also features Holger Friedrich and Thomas Brund, continue to run two Sydbank portfolios and also offer input on the bank’s entire $2.7 billion EMD retail and institutional funds.
Although the graphs above show the fund moving broadly in line with the benchmark, his steady performance earned him a place in our consistency analysis.
Since taking the ISI Emerging Market Bonds fund into his own boutique Blackwood has delivered strong returns, ending up marginally ahead of his benchmark. His reputation as a 'safe pair of hands' looks to be safe for now.
More about this:
Look up the funds
- Carnegie Global Healthcare
- Rhenman Healthcare Equity L/S R1 SEK C
- H2O Multibonds R
- CCR Valeur R
- Mandarine Valeur I
- MainFirst - Classic Stock Fund A
- Fidecum SICAV - Contrarian Value Euroland A