Achieving superior returns in increasingly uncertain markets has been a hallmark for boutique managers.
Independent, agile, next-generation managers are proving to be more capable of achieving alpha than their larger competitors in increasingly uncertain markets. They have thrived on uncertainty and volatility as they use an active and agile investment process to make decisions quickly and implement them.
Amplify Investment Partners’ unit trusts and hedge funds are managed by several active, independent managers with proven track records and aligned investment interests. “Our boutique managers have a relatively wider range of tools to navigate volatile markets and deliver on client expectations as many have hedge fund backgrounds and alternative toolkits,” says Amplify’s head of positioning, Nico Janse van Rensburg.
Boutique managers are generally owner-managed, meaning that their managers have skin in the game. They have quick decision-making processes to take hold of opportunities as they arise. Most have a strong large manager, bank or hedge fund background, and the collective experience of the team is long and deep.
“Their focus is on putting runs on the board rather than aiming for sixes and this has proven to be a match-winning strategy,” Janse van Rensburg says. “Consistency is key. We are aiming to consistently provide top quartile performance over a three-year rolling period. Volatility hurts compounded returns – particularly in the more conservative multi-asset categories where investors need greater consistency.”
Amplify, a recent winner of a Raging Bull award, continues to be recognised and attract record inflows. “This is driven by us consistently demonstrating our ability to achieve alpha in varying investment environments,” says Janse van Rensburg.
For example, the award-winning Amplify SCI* Wealth Protector Fund, ranked number 1 since inception, has returned 11.75% over five years against a 7.84% benchmark (CPI + 3%) and a 6.7% average return of comparable multi-asset funds.
Other examples include the Amplify SCI* Strategic Income Fund, ranked number 4 over five years, which returned 8.38% over five years against a benchmark STeFI + 1% of 6.78% and average 6.94% for SA multi-asset income funds. Similarly, the Amplify SCI* Defensive Balanced Fund, ranked third over seven years, returned 8.66% over those years against a 6.6% return of similar funds.
These performances reflect Amplify managers’ greater focus on returns and use of a broad range of risk-management tools to diversify risk and manage downside risks. There is a heightened focus on asymmetrical returns and willingness to give up some upside to protect the downside. Amplify’s managers are pragmatic and will not hold on to a share if they feel there is too much risk or that the share will no longer deliver the required returns.
“Introducing a boutique manager into a blend of larger managers not only decreases the volatility of the portfolio, but also enhances the return profile, creating a superior risk-adjusted portfolio,” says Janse van Rensburg.
*Sanlam Collective Investments
