2. 2 met collective investments
Agenda
1. Trends in the asset management industry and role of the
‘smaller/boutique’ investment manager in portfolio construction
2. Introducing our partners and their unique value proposition
3. 3 met collective investments
Bifurcation – “Cheap” Beta and “Hunt for Alpha”
Revenue margins2005 Size ($x T)
Below
average
growth
Above
average
growth
Source: National statistics, BCG analysis, Morgan Stanley
Research. Projections 2005-2010.
10bp 30bp 40bp 50bp 100bp 200bp20bp
Index funds
4.7
Active bonds
13.2
Active equities
16.2
Structured
products
0.6
Quantitative
products
0.4
Private Equity
1.5
Hedge Funds
1.2
Innovative productsTraditional
products
Market Tracking
Money Market
6.7
B
C
Real estate
1.3ETF
0.3
A
4. 4 met collective investments
Active managers becoming a scarce breed
5. 5 met collective investments
The asset management barbell
Polarisation of cheap beta and difficult/expensive alpha
6. 6 met collective investments
Background to the rise of boutiques
• Significant growth in global AUM of the asset management industry
• Regulations such as the Dodd-Frank Act – traders spun out of banks
• Top performers at large investment managers want more freedom to
implement their ideas
• Growing sophistication in investor base
• Expertise within niche markets
• According to David Swenson (ex CIO of Yale University endowment) –
“Owner operators simply work harder and better than rank-and-file
employees and that small, independent, entrepreneurial organisations
provide greater alignment of interest between firm and client.”
7. 7 met collective investmentsSource: Sungard Asset Arena 360
Boutique Definition Heatmap (by region)
Entrepreneuralism Niche Focus
Investment Team
Ownership
Small Staff
Less than $10b
AUM
Specialised
Products
US
Europe
Asia Pacific
Latin & South
America
Middle East & Africa
Canada
All
Bright green indicates most popular term. Orange represent least popular term.
Colour determined by popularity within each region
8. 8 met collective investments
Rise of boutiques… the global experience
Source: Lipper, a Thompson Reuter Company (Legend indicates size of funds)
9. 9 met collective investments
The rise of SA boutiques, growing in line with CIS
equity trends and capturing even greater proportion
0
20
40
60
80
100
120
140
160
180
200
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Numberofunds
%ofinvestmentmanageruniverse
Total no. of large institutional managers No. of boutiques Total no. of funds
Source: ASISA statistics for SA collective investment schemes
10. 10 met collective investments
The value proposition of boutiques over larger,
institutional peers
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Rolling 3 years excess returns of SA General Equity Funds (net of fees)
Average Bank, life assurer owned Average Boutique managersLarge Institutional Managers
Source: Morningstar data & Momentum Manager of Managers research
11. 11 met collective investments
Median rolling yearly excess returns of Australian
equity managers
Institutional Boutique
Source: Russell Investments. Past performance is not a guide to future performance
12. 12 met collective investments
Key factors behind the global boutique boom
2%
19%
20%
22%
45%
52%
61%
63%
66%
76%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
Investor distrust of larger firms
Uniqueness of investment research
Investors looking for diversification
Agility
Client service
Focus on one investment strategy
Active management vs benchmark tracking
Pure and simple - performance
Talent
Source: Sungard Asset Arena 360 industry report: THE GROWTH OF INVESTMENT
BOUTIQUES: David versus Goliath (2012)
13. 13 met collective investments
Boutique characteristics in South Africa
Type Description Example
Independent
Group as a
stand-alone firm
Part of large firm
Acquired by
larger investment
managers
Multi-boutique /
best of breed
• Collection of
boutiques
• Own
investment
procedures
and brands
Own brand
Brand of the
manco
14. 14 met collective investments
Global practices
Wells Fargo Investment Management
16. 16 met collective investments
Imqubator seeding new investment managers
17. 17 met collective investments
Levers by asset management business models
VALUE
PROPOSITION
ORGANISATIONAL
MODEL
KEY LEVERS
1 α HUNTERS (Multi-)boutiques
Ability to manage complexity
Specialised investment expertise
2
TRUSTED
ADVISORS
Partnerships of
advisors
Independence
Client understanding
3 β GAZERS
Large independent
investment managers
Branding power
Economies of scale
4
DEMAND
EXPERTS
Asset management
units of banks/insurers
Group brand and distribution
channels
Product innovation
Source: Roland Berger Strategy Consultants
18. 18 met collective investments
Introducing the MET Premium PartnersTM concept
19. 19 met collective investments
MET Premium PartnersTM objective
Help develop the advisory and investment
management industry in South Africa through skilled
advice, efficient administration and meaningful
distribution – in a cost-effective way
But it’s about quality and not quantity
20. 20 met collective investments
Our objective
• We aim to position and promote “Growing Tomorrow’s Leaders
TodayTM” and “MET Premium PartnersTM” within the broader retail
financial services industry
• We align with and seek partners that:
• We have identified as offering quality investment management skills
• That have specific skills in areas that we want to complement our
“Premium Partners” and universe composition across different strategies
and styles
• Have a high degree of management independence and want to retain their
own brand
• Have undergone rigorous research by Momentum Manager of Managers
and have therefore received our stamp of approval
21. 21 met collective investments
How MET Collective Investments is supporting
boutiques
• Increased visibility and scale
• Fund administration and compliance via the MetCI licence
• Letting good investment managers concentrate on managing alpha
• Backing of MMI’s balance sheet
• e-Commerce strategies
• ‘Core’ pricing on the Momentum Wealth Platform
22. 22 met collective investments
Managers undergo vigorous research by
Momentum Manager of Managers
Assets under management R318 billion (>R500bn group assets)
Staff 170
Investment team 23 (+ 14 London office)
Years in manager research 19
Years in multi-manager investments 19
Investment portfolios 200+
Parent company (MMI Group) AA Fitch rated
Measure Our numbers
Manager of Managers of the year 2013
24. 24 met collective investments
Diverse investment opportunities for growth
investing
Category Partners
Active equity
Value
Quality
Specialiststrategies
25. 25 met collective investments
Diverse investment opportunitiesSpecialiststrategies
Category Partners
Passive/Smart beta
Category Partners
Property
26. 26 met collective investments
Diverse investment opportunities for retirement
planning
Category Partners
Balanced
Flexible
asset
allocation
High equity
Medium
equity
Low equity
Income
Specialiststrategies
27. 27 met collective investments
Diverse investment opportunities
Category Partners
Income
Flexible
Bonds
Money
market
Specialiststrategies
29. 29 met collective investments
If your investment boutique were a car, which one would it
be?
Car Representation
Solid track record
Mid-market consistency supported by quality
engineering
Stable returns
High performance in a well-defined niche
Provides protection and performance in tough
markets
Focus on green credentials and sustainability
Old school investment manager for old money
Good value for a standard product
Source: Sungard Asset Arena 360
30.
31. 31 met collective investments
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• Manager information (fund fact sheets)
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