SMAs - Competition vs Disruption

Research evidence excerpt

SMAs - Competition vs Disruption

rofit

Evidence does not support a wave of boutiques - period: The claim that low barriers to entry

have inspired a new wave of de novo boutiques is absent from the most important element of GDG XJO

investing - evidence. We have tested such theories with the largest issuer-managers, industry $8.5$7.5

bodies, and platforms, and find that, apart from a handful of incumbent hires from rivals, such $6.5

claims quite simply do not stack up. $5.5$4.5

$3.5

Barriers to entry are higher than perceived: The "low barriers" argument works only if entry $2.5$1.5

is defined as "incorporating a firm". However, the commercial reality suggests there are many $0.5Dec-23 Apr-24 Aug-24 Dec-24 Apr-25 Aug-25 Dec-25 Apr-26

challenges to reaching profitability including obtaining the necessary licenses, platform and RE .

due diligence, building trust with advisers and building an adequate performance track record. Figure 1 - GDG Historical P/E

Additionally, ASIC's regulatory scrutiny regarding governance and consumer outcomes is likely GDG P/E GDG Average +1 Stdev -1 Stdev

to lengthen the process. Our channel checks suggest, it takes around 24 months before the 70.0x

first dollar is received and $3m-$5m in cash burn before generating a profit. 60.0x

50.0x

What a winning formula looks like: Across the leading firms, the winning formula is consistent: 40.0x

risk management, portfolio design discipline, scale in FUM that generates fee discounts, 30.0x

efficient execution, technology, governance and adviser alignment. Evidentia works on 20.0x

practice advisory first, and the addition of research-backed, customized, high-conviction . Oct-22 Apr-23 Oct-23 Apr-24 Oct-24 Apr-25 Oct-25 Apr-26

Source: FactSet, Jefferies

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