The financial news recently has been dominated by mergers and acquisitions, with Franklin Templeton confirming a £1.3trn tie-up with Legg Mason, and Jupiter buying Merian Global Investors to run a combined £65bn.
While the combined forces of Jupiter and Merian may pale into insignificance compared to the sheer size of the Franklin Templeton/Legg Mason deal, it is worth pointing out the acquisition marks the fourth-largest M&A deal in the UK overall this year, according to data from Refinitiv.
Refinitiv data also shows that last year 121 UK asset management firms partook in mergers and acquisitions, which amounted to a total value of £6.8bn.
In 2018, there were 125 deals with a total value of £3.8bn.
If M&A deals among UK asset managers are becoming increasingly larger as the industry continues to consolidate, where does this leave boutique asset management firms?
Investment Week published an article back in May 2019 regarding the fate of smaller asset management companies, in which St James's Place Wealth Management CIO Chris Ralph warned that boutiques will find it "difficult to prosper considering the cost and complexity associated with asset management".
But there are benefits for some boutique asset management firms relative to their larger counterparts, according to Paul Craig, portfolio manager at Quilter Investors.
He said they can "give investors access to unique and interesting strategies, as well as being adaptable to market environments. Not only this, but boutiques can also be a great breeding ground for the next generation of fund managers".
Ben Yearsley, investment consultant at Fairview Investing, argued that boutiques will likely retain their place in the UK asset management market, although a manager's ability to launch their own company from scratch has become far more challenging.
There has only been a handful of cases of this happening over recent years, he told Investment Week, with Jupiter's Alexander Darwall launching Devon Equity Management last year, and Janus Henderson's (then Henderson's) Richard Pease founding CRUX AM in 2013.
The common denominator among these managers, however, has been the fact they were able to move their existing vehicles across from their previous employers.
Yearsley said: "Alternatively, you do what [former Miton managers] George Godber and Georgina Hamilton did, and what [former Kames Capital managers] Stephen Snowdon and David Ennett did and join a multi-boutique."
Meanwhile, Craig pointed out that small firms must also not "overstretch themselves and launch esoteric strategies that will not appeal to investors or carry too much risk".
Interestingly, some of the M&A activity the asset management industry has seen over recent months has been the tie-up of two boutiques, including Liontrust's purchase of Neptune, Miton and Premier merging, and Polar Capital acquiring First Pacific Investors.
In a world of consolidation, will boutiques have to change their tactics?