So far 2014 has seen the emergence of a new breed of ‘super-boutiques’ following the merger of a number of well-known investment offices. However, Veritas is one boutique that has no desire to take part in this trend.
Veritas Investment Management CEO Mark Rayward (pictured) believes consolidation has prepared the ground for specialist boutiques.
‘There is good opportunity and space in the market for focused boutiques and specialist investment managers to work with clients and lawyers, accountants and offshore trust companies consultants.
‘There is plenty of space now because most of our competition has merged with someone,’ he explained.
Veritas currently manages £1.5 billion, with an average client portfolio of £3 million plus. It employs 10 investment managers, eight of whom are partners. Over the past 18 months, the firm took on an extra two partners.
‘The partnership has been steadily growing, at a pace of an average £150 million a year in assets under management terms,’ he explained.
‘That’s a controlled sensible rate, because it’s not too many clients. We’re a partnership and we don’t want to get too big.’
In light of this, Rayward believes the way forward is to remain a specialist boutique, and he is in no hurry to reach critical mass, which he places near £2 billion.
He is keen for the firm to remain as a pure investment manager with no financial planning team, which he expects should stand Veritas in good stead.
‘The only way to deal with the industry structural headwinds over next decade is by either getting bigger to have an economy of scale, or be very focused and refuse to provide all services for all men.’
But has a merger ever been on the cards for the boutique? No, Rayward insists, as this would mean introducing flaws to the boutique concept.
‘One of the issues with third party investors is that often they can have different agendas and priorities and that creates a conflict. We prefer to remain independent and owners of our business in line with our investors.
He adds that merging businesses is ‘always tough’.
His comments come a month after Boston-based Affiliated Managers Group (AMG) agreed to buy a majority stake in Veritas Asset Management, the fund business that split from Veritas’s private client arm in 2012.
Around this time, the private client arm was renamed Veritas Investment Management, while the funds and institutional business retained the Veritas Asset Management name.
Rayward is positive about the acquisition of Veritas’s corporate partner and says AMG has shown it is supportive of both businesses.
‘There is no change to our partnership and I’m very happy they have effectively tied in the partners of Veritas AM. For us, it has created stability in the relationship.’