Is there a Boutique Asset Management Premium?

Abstract

There exists evidence in the performance evaluation literature that mutual funds that are manufactured by large asset management groups with large “fund families” benefit from economies of scale in terms of marketing, distribution and resourcing that accrue from the larger organisation. In this paper we examine the performance of funds that are managed by “boutique” asset managers that tend to be small and which tend to offer a more focused fund range. Using European mutual fund data, we find evidence to suggest the existence of a boutique asset management premium. This premium is particularly pronounced in the European Mid/Small Cap and the Global Emerging market fund sectors, where we find it to be both economically and statistically significant; a finding that is robust to the factor model used to calculate alphas. These results suggest in particular, that if an investor is looking to invest in a European Mid/Small Cap or Emerging Market equity fund, then they should give serious consideration to investing with a Boutique fund manager.

Keywords: Boutique Asset Manager, Mutual Fund Performance

JEL Classification: G10, G23