02 August 2018Peter Armitage, Anchor
In the South African investment industry, the vast majority of assets are managed by the large asset managers. These firms have dominated the asset management landscape for the last two decades. In more recent years, boutique firms have begun to carve out a niche for themselves – servicing clients that desire a more nimble approach to investing, backed by high-quality research and investment processes, delivered with superior levels of client service.
One such firm is Anchor, a leading name in boutique wealth and asset management. According to Anchor CEO Peter Armitage, there are many reasons why a boutique firm, such as Anchor, is an attractive option to financial advisers looking for something that large managers can’t offer.
“The size of boutique firms (that they deal with smaller investment values) gives them a significant advantage,” he explains. Boutiques are able to react more nimbly than their larger competitors to changing market dynamics. “Where market conditions rapidly change, for example, we are able to act faster, thereby taking advantage of opportunities or reducing risk for our clients.” Large firms, managing huge pools of assets, are unable to act with the same speed. Due to the size of assets managed by boutique managers, they can more quickly sell out of and buy into positions than the larger asset managers. Small and mid-cap stocks are also more accessible to boutique managers – the position sizes can have a meaningful impact on their funds, whereas these types of positions are likely too small to impact the funds of large managers.
A further advantage, according to Armitage, is Anchor’s ability to offer financial advisors more than just an investment solution. “As a boutique manager, we are obsessed with client service and look to establish long-term relationships with our IFA partners. We offer advisors access to fund managers and the senior members of our team, something we believe is a key differentiator.” Anchor and other boutiques are also at the forefront of technology, offering their IFA partners access to world-class tech solutions.
Excellent investment processes and the best investment minds have traditionally been the domain of the large asset managers. However, several of the industry’s top minds have left large corporates to apply their skills and experience in a boutique environment, enabling them to offer bespoke solutions to clients. Financial advisors thus no longer need to stick to large asset managers to access high-quality, experienced investment processes. “We spend a lot of time researching and understanding stocks, asset classes and market forces.” says Armitage, “there is no ‘fly by the seat of your pants’ philosophy here. We have an experienced investment team, running an investment process that would rival that of any large asset manager.” A claim that stands out, coming from one of the industry’s most experienced figures.
5 Years and still going strong
This conviction has certainly yielded results for Anchor. This year marks the 5-year anniversary of two of their funds – the Anchor BCI Equity Fund and the Anchor BCI Worldwide Flexible Fund.
Anchor BCI Equity Fund – where nimble outperformed traditional
The Anchor BCI Equity Fund is Anchor’s flagship unit trust and is the top performing general equity fund in South Africa over the five years since its inception in 2013. Focused on sustaining high long-term capital growth, the portfolio is constructed from bottom-up, fundamental research with an investment philosophy that favours quality stocks with superior returns on capital, cash flows and pricing power.
Stock picking and a nimble approach to managing the fund have been key to delivering superior returns for clients invested in this fund.
Anchor BCI Worldwide Flexible Fund – where conviction exposed convention
The Anchor BCI Worldwide Flexible Fund is another of Anchor’s funds that have reached the key five-year mark. The fund invests offshore across asset classes and is predominantly exposed to equities in global developed markets. It has been a regular top quartile performer and is managed with a style founded in conviction. Fund manager David Gibb consistently emphasizes the fund’s focus on long-term investing and his hunt for global companies with a durable competitive advantage.
With pressure on fees and lackluster performance from markets in recent times, financial advisors would do well to consider the benefits of investing a portion of their clients’ money with a boutique manager. The ability to invest in assets unattainable to large managers and the added value received from boutique firms through intimate client service and access to key staff puts boutiques in a unique position.