In the past, the solution had been to market to individual independent financial advisers, each placing small amounts of capital into the fund.
Arthur says: “The problem is that there are fewer people out there now to invest those smaller amounts. What we have started to do is to offer a special share class with lower charges to investors who come into a fund earlier.
“At a time when there is a lot of scrutiny on costs, this appeals to a lot of the fund buyers out there, including some of the bigger buyers. But it is certainly the case that we didn’t have to do that 20 years ago when I started Spring Capital, and obviously it means lower margins at the start,” he continues.
“One of the things that the bigger fund buyers place a lot of emphasis on is the governance of the boutique — they want to know if there is someone in the firm that can challenge the fund managers.”
Kenny says he believes this trend has gone one step further: “Realistically, if you want to launch a fund now there needs to be two named fund managers, people want the reassurance that it’s not all about the ego of one person. And more broadly, if you are trying to launch a boutique now, you need to have a few of those big buyers lined up before you start.”
The temptation for advisers to show they are looking far and wide for opportunities, in the age of consumer duty, should mean a boon for boutiques. Whether that is what plays out will be clear from the way advisers react to funds launched by established names such as Jupiter’s Whitmore and Richard Watts.
David Thorpe is investment editor at FT Adviser
