With their ability to generate new investment ideas and operate with greater flexibility, boutique firms often find favour among clients seeking new or innovative ideas.
In the latest edition of our European publication Citywire Selector's ‘Selector snapshot’, one selector shares the secret of uncovering the best of the lesser known companies.
Selector: Charles-Antoine de Bellefroid
Company: Puilaetco Dewaay Private Bankers (Belgium)
We are part of the European group KBL European Private Bankers and have analysts across Europe. We tend to find niche or smaller emerging boutiques earlier because our analysts tend to be closer to the local markets.
They manage to identify a manager before they are recognized by the broader European market, which is an advantage. That is where we try to differentiate from others.
I think Syquant Capital has very good performance, as it is a long-standing boutique which has grown in assets over the recent years. They have a long track record and it is a boutique I quite like.
In the long/short space we recently added Phileas Long/Short Europe, which is also a small French boutique that we find interesting. In thematic investment we are invested in the Polar Capital Biotechnology fund.
MiFID II uncertainty
MiFID II is a big change for the industry so we have been preparing it for a couple of years now. There are still areas of uncertainty, especially with how it will be incorporated into national laws.
For European groups, having a standardized framework across Europe will make things much easier rather than each country having its own interpretation of MiFID II and applying local constraints on top of it.
So far we feel comfortable with how we have prepared for this. One of the challenges still open is the notion of target markets and how that will be used across the industry.
Based on our discussions with asset managers, we assume there will be some sort of standardized definitions of what a 'target market' should be. We would then have to match each product to each client's profile. So this is something that remains to be seen, but hopefully it will be standardized.
Once you have this data, it needs to feed into the bank's systems. Most data providers also work on making sure once they have this target market information available that they will feed this data into the system.
If there is a standardized definition of a target market across Europe and with data feeding in automatically, I think it shouldn’t be too much of an issue for the industry to be ready on time.