The rise of the boutique asset manager

Forty years ago, insurance and trust companies dominated the pension investment industry. But by the early 1980s, the landscape began to change as boutique asset managers started to take a growing chunk of the business. Boutique managers were attractive to investors because they specialized in a type of asset or style of investing, says Zev Frishman, chief investment officer at Morneau Shepell Asset & Risk Management Ltd. The insurance and trust companies, he notes, were primarily conservative managers offering balanced investment solutions. Frishman notes that prior to the entrance of boutique managers, investors had less involvement in the intricacies of their portfolio construction. “Clients would go to the insurance company and say: ‘Here’s the size of my fund. I want a certain return. Here’s my risk parameters. You go out and do what you can to get that return for me.’ They won’t specify whether they want value investing or growth investing.”

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