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A growing body of academic research is challenging a long-held belief in the investment industry that bigger fund managers inherently perform better. Recent studies now suggest that boutique asset managers — smaller, independent firms — may consistently outperform their larger counterparts, prompting calls for a shift in how platforms, consultants, and advisers evaluate and select fund managers.

This is relevant for fund operators because it encourages re-evaluating selection criteria beyond size, highlighting the potential of boutique managers to deliver better performance, agility, and client alignment. Embracing this shift could lead to more diversified and effective investment strategies but could also illicit new challenges for operations teams.

The latest study, The Case for Boutiques, was conducted by Professor Andrew Clare of Bayes Business School in partnership with the Independent Investment Management Initiative (IIMI). Based on a survey of 87 boutique firms across the UK and Europe, the research identified four key factors behind their success: independence, focus, alignment with client interests, and agility in decision-making.

"There is a growing academic consensus that boutique managers have

structural advantages when it comes to performance."

This new qualitative research complements an earlier 2022 quantitative study — also led by Clare and sponsored by the Group of Boutique Asset Managers (GBAM) — which analysed the performance of over 780 funds across 120 firms globally. That study found boutiques outperformed larger peers consistently in sectors such as European Mid/Small Cap equities and Global Emerging Markets. The study was covered by Fund Operator after its release.

Together, these two studies suggest that boutique asset managers may merit increased attention within the investment industry.

GBAM Chairman Tim Warrington said the findings demands a re-evaluation of long-standing industry biases. “There is a growing academic consensus that boutique managers have structural advantages when it comes to performance,” he said. “Yet they remain underrepresented on many platforms and often overlooked by consultants.”

The core issue lies in the way fund managers are assessed. Many platforms and advisory lists use selection criteria that unintentionally disadvantage smaller firms. Boutiques often fall short of minimum asset thresholds, lack large marketing budgets, or don’t have the brand recognition of bigger players. This means the very managers who deliver strong investment results can be penalised simply due to their size.

The studies highlighted several structural reasons boutiques could have an edge. Their independence from larger parent companies allows them to make quicker, more flexible investment decisions, free from the layers of bureaucracy common in bigger firms. They tend to specialise in narrower investment areas, allowing greater expertise and depth, especially in complex or less efficient markets.

A further advantage is the alignment of interests with clients. In many boutique firms, the investment managers are also owners, directly linking their financial success to client outcomes. This encourages a long-term, performance-focused mindset and greater accountability.

"Investors are recognising the value of specialist managers. It’s important that

consultants, platforms, and advisers adapt their selection frameworks to reflect this.”

While the IIMI study focuses mainly on UK and European boutiques, GBAM emphasised that this “boutique premium” is a global trend. Its membership spans Europe, Asia, and the Americas, offering a broader international perspective.

Warrington added that “The boutique premium is not confined to any one market”.

“Investors worldwide are recognising the value of specialist, focused managers,” he said. “It’s important that consultants, platforms, and advisers, across all regions adapt their selection frameworks to reflect this.”

As the asset management industry becomes more consolidated, GBAM argued that boutiques provide an essential counterbalance to large scale-driven firms.

GBAM urged fund selectors to review and revise criteria that may unintentionally exclude smaller managers. Minimum asset under management (AUM) thresholds, distribution requirements, and onboarding costs often favour large, or more well-resourced firms but can disadvantage boutiques with proven performance records.

Academic evidence suggests boutique firms can deliver better results, Warrington said, adding that fund selection processes need to catch up. In an industry where scale tends to dominate, he argued that it’s time to refocus on investment quality.

In its assessment of the study, GBAM called for a more “balanced, evidence-based” approach to evaluating fund managers. The group added that diversity in manager size, ownership structure, and investment approach could benefit investors and support a healthy, competitive marketplace.

 

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