Table of Contents

Boutique: What It Means in Finance and Investing, With Examples

By

澳洲幸运5官方开奖结果体彩网:Julia Kagan

Updated July 21, 2022

Reviewed by

Khadija Khartit

Fact checked by

Yarilet Perez

What Is a Boutique?

A boutique is a small financial firm that provides specialized services for a particular segment of the market. Boutique firms are most common in the investment management or 澳洲幸运5官方开奖结果体彩网:investment banking industries. These boutique firms may specialize by industry, client asset siz💃e, banking transaction type, or other factors to🧔 address a market not well addressed by larger firms.

澳洲幸运5官方开奖结果体彩网:Bulge bracket is a slang term referring to large, multi-national investment banks that traditionally focus on the needs of big corporations. Boutique firms, on the other hand, tend to specialize in meeting the investment needs or banking needs of 𒐪smaller companies, companies in specific industries, or provide n🦩iche services.

Key Takeaways

A boutique firm is a small financial firm offering specialized and personalized investment management, banking, or niche financial services.
Boutique banking firms usually handle deals of less than $500 million.
A boutique bank may offer its bankers more autonomy to operate than they would be able to in a large or “bulge” firm.
Small boutique banks depend on creating strong customer bonds and networking to maintain key connections.
Working at a boutique firm offers an alternative for finance professionals who are looking for something different than a large-firm experience.

How a Boutique Works

Smaller players in the financial segment may prosper by positioning themselves to serve a specific niche. Although they may lack some of the resources of larger firms, boutique firms aim to offer more individual🔥ized services and tailor their offerings to the needs of their clients.

In fact, this ability to provide individualized service is often the 澳洲幸运5官方开奖结果体彩网:competitive advantage boutique firms tout when comparing themselves to their larger competitors. Because boutique firms often work and find new clients in a relatively small-sized market, 𝓡♋they don't have to compete with larger firms with more resources.

Tip

🤪Boutique firms are often founded by former employees of larger firms who wish to strike out on their own.

Boutique Performance

According to a study performed by Affiliated Managers Group, Inc. (AMG), boutique investment managers have outperformed in a number of key measures since the mid-1990s, providing investors with a superior value over the long term. The AMG study covered nearly 5,000 institutional equity strategies from March 31, 1998 to March 31, 2018.

Boutiques outperformed non-boutiques in nine of 11 equity product categories on an annual basis by 62 basis points (bps). Investors investing exclusively with boutiques would have enjoyed a 16% greater return on investment (ROI) than non-boutique investors.

Boutiques have significantly outperformed the 澳洲幸运5官方开奖结果体彩网:benchmark indices. The typical boutique investment strategy has outperformed its benchmark index in all 11 equity product categories annually by 135 bps.

Important

Boutiques often hire 澳洲幸运5官方开奖结果体彩网:portfolio managers across different industries in order to provide their clients with a more holistic perspectiꦺve and the ability to specialize in specific niches.

Examples of Boutique Investment Banks

Boutique investment banks are growing in size and stature. Based on market capitalization, the four biggest boutique banking firms in the U.S. in 2021 were Lazard Ltd., Houlihan Lokey Inc., Evercore Inc., and PJT Partners Inc. Other prime examples are Jefferies, a boutique investment bank renowned for healthcare sector expertise and FT partners, one of t💞he most active investment banks in the Fintech space.

According to industry sources, the top boutique investment banks in 2021 were:

Allen & Co.
Cowen
Perella Weinberg
Lazard
Rothschild
Evercore
Greenhill & Co.
Blackstone
Houlihan Lokey
Jefferies

Special Considerations

Finance professionals who start boutiques have a vested interest in ensuring their firms succeed and are prepared to commit large amounts of time and capital for 💎long-term growth; this aligns the boutiques' and investors' interests.

Entrepreneurship characterizes the culture of many boutique firms, which attracts talented investor♐s and portfolio managers who are often known for their investment prowess. Boutiques often have a partnership structure, allowing their cultures to be nimble, encouraging innovation and responsiveness.

What Is the Difference Between Boutique and Bulge-Bracket?

In the context of investment banking, 澳洲幸运5官方开奖结果体彩网:bulge bracket refers to the largest such institutions in the world which regularly handle multi-billion dollar deals. Employee satisfaction an♊d hand-holding through the dealmaking process, however, is not always a top concern. Boutique investment banks tend to specialize in particular areas or sectors, and give more personalized service to their clientele.

What Are the Categories of Boutique Investment Bank?

Boutique investment banks can be broken down into categories:

Elite boutiques (EBs) are at the top of their game, often advising alongside bulge bracket banks on important deals.
Up-and-coming boutiques are those that are gaining in stature and approaching EB status.
Regional boutiques focus on specific geographical areas, such as Boston, Greater NYC, Silicon Valley, or Hong Kong.
Industry-specific boutiques specialize in a particular industry sector or product niche, for example fintech or healthcare.

Who Are the Bulge Bracket Investment Banks?

The bulge bracket investment banks are the largest international financial firms♎ including the likes of Goldman Sachs, JP Morgan Chase, Morgan Stanley, Citibank, BofA Merrill Lynch, Barclays, UBS, Deutsche Bank, and Credit Suisse.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

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