Case Study: Boutique Asset Manager

Helping a new entrant to gain insight, manage risk and drive marketability for a new product.

Background  

Boutique asset manager looking to launch a new alternatives investment product providing capital direct-to-consumer.  Transformational business model intending to disrupt an established industry.  Capital to be supplied by institutional investors, including UK pension funds in exchange for income and capital returns.   Early engagement occured ahead of the launch of the product. 

Approach

Charles took a first principles approach to understanding the drivers of return and risk in the economic model.   He then paired up this understanding with his experience on the buy-side - to consider what exposures institutional investors would likely wish to obtain - and avoid.  In conducting the assessment Charles discovered hitherto unassessed and unpriced risks of very unfavourable returns to investors under certain economic environments such as a spike in interest rates causing stress in markets. 

Charles observed that the downside risk could be managed by factoring in the balance of risk in the arrangement of contracts or pricing. For example revisiting the contracts with consumers to reshape the risk profile and/or by explicitly allowing for the downside risk exposure to be assessed and priced in the arrangement.

The Result

A more investible product for investors, greater robustness with reduced risk, and improved marketability and likelihood of securing capital funding at launch.

Charles Marandu FIA CFA has spent over 20 years working with a wide range of boards, helping to align risks and opportunities at the intersection of pensions and investment management. Today he applies this knowledge and skillset in building a portfolio of roles including Advisory and Non-Executive Director engagements. Please get in touch via the Contact link for more information.