Asset managers are “increasingly on the hunt for independent boutiques” in the search for alpha and to differentiate themselves “with actively managed strategies that can’t be easily replicated.” The problem, according to a recent article in Institutional Investor, is that the more managers that do it, the greater they risk “killing the golden goose.”

The article cites comments from Affiliated Managers Group CEO Jay Horgen, whose firm has been investing in independent managers for over 25 years. According to Horgen, the risk in acquiring or investing in a boutique is in destroying the firm’s culture altogether: “We’ve always had a first principle, which we borrowed from the Hippocratic oath,” he says, “ ‘first, do no harm.’ At a lot of organizations, the orientation is that everybody should do it our way. But that destroys the individual cultures at these affiliates. Acquirers need to leave them alone, but they don’t.”

Casey Quirk (part of Deloitte) principal Kevin Quirk weighs in: “On the larger end of the business, there is an oversupply of large branded asset management companies. On the other end, you have smaller focused businesses that are all about active returns. At some point those businesses will be capacity constrained, and if they exceed that, it will be drag on performance that will affect fees and future flows into the business.”