Business bodies
I was never going to be an Olympic gymnast. In fact, I was never going to be a gymnast at all. You see, my body does not bend well. It was not built that way. My genetic makeup does not include shallow or open joint sockets, more elastin vs collagen in my tendons and ligaments, longer muscle fibres, or any of the other natural genetic factors that result in increased flexibility.
Of course, it is not just about nature; it is also about nurture. You can maintain and improve your flexibility over time by stretching, mobility training, and avoiding injuries. Sounds great, but I find stretching and the like incredibly painful, difficult and embarrassing to do. And do not get me started on yoga — every pose I have ever attempted looks like a plank! Back of the class for me.
Genetics sets the ceiling, and conditioning determines how close you get to that ceiling.
Flexibility is good for the body, especially as we age. That is because over time, the natural processes rein everything in – connective tissues tighten, joint fluid decreases, and muscles shorten (especially with sedentary habits), making us more vulnerable to injury.
Businesses are similar.
Startups are inherently challenging and risky. According to the US Bureau of Labor Statistics and various global studies, out of 100 new businesses started, only 50 survive 5 years, and 30 survive 10 years. Fewer than 1 in 3 startups make it to 10 years, and those that do often look very different from how they began.
Most businesses start life flexible, fast, and founder-driven. They are entrepreneurial, hungry, and adaptive – pivoting to survive. There is little red tape, and decisions are made quickly by people close to the action. To make it, they must be nimble.
But as success compounds and scale is achieved, structure replaces instinct, process replaces hustle. Preservation becomes as important as progress, founders may step back or exit entirely, replaced by layers of professional managers, governance and risk management mature – but so does inertia. The flexibility fades. The organisational arteries harden.
In the beginning, businesses – like bodies – are lithe and reactive. They twist, stretch, and pivot with ease. But as they grow, structure sets in. Processes calcify. Movement becomes more deliberate, sometimes slower. Agility is not lost all at once—it is given away in small increments of caution, compliance, and comfort. That is not necessarily a flaw; it is the natural arc of maturity. However, just as individuals can retain flexibility through discipline and conditioning, organisations can stay nimble by design.
Anchor
At Anchor, we do not just embrace being nimble; it is one of the defining characteristics of our business. While the Anchor Group has experienced significant growth in size and reach, it has done so in a way that maintains its nimbleness.
Being nimble is not just about being quick. It is also about adapting without drama, thinking independently, acting with purpose and staying light enough to move but grounded enough to hold your position—all great traits required to be successful in the highly competitive asset management industry.
Within Anchor Asset Management (AAM), we have deliberately maintained a lean structure. We are only just over ten years old, and many of our investment team members have been with us from the beginning, or close to it. We have not forgotten nor abandoned the traits that got us here, and we have maintained and developed structures and systems that preserve this flexibility, even as our business grows and matures.
The “size premium” in asset management
In his landmark paper “The Relationship Between Return and Market Value of Common Stocks”, Rolf Banz (1981) found that smaller firms (by market capitalisation) earned higher average returns than larger firms over long periods. Marc Reinganum (1981–1983) expanded on Banz’s work and linked the size effect to market inefficiencies. So, the size premium refers to the observed tendency for smaller companies to outperform larger companies on a risk-adjusted basis over the long term.
In asset management, the “size premium” refers to smaller asset managers outperforming larger ones, particularly in active strategies. This includes potentially stronger alpha generation, greater adaptability, and higher client alignment.
Why might smaller managers outperform?
Here are the key reasons:
- More nimble decision-making
- Smaller firms can move in and out of positions faster without moving the market.
- Layers of committees or bureaucracy do not bog them down.
- Position sizing is less constrained by assets under management (AUM) — they can act on smaller, less liquid, high-conviction ideas.
2. Access to less-crowded opportunities
- Smaller managers can invest in niche, under-researched or capacity-constrained ideas, such as microcaps, thinly traded credit, or local anomalies.
- Large managers often cannot justify small positions due to scale, even if returns are compelling.
3. Higher alignment and accountability
- Founders and key portfolio managers (PMs) often have skin in the game.
- Client outcomes matter more — performance and relationships, not just scale, drive revenue.
4. Lower organisational inertia
- It is easier to shift strategy, integrate new research, or change views.
- No legacy systems, siloed teams, or “too-big-to-change” thinking
5. Less index-hugging / benchmark constraint
- Larger managers tend to drift toward closet indexing to manage risk and maintain scale.
- Smaller managers often feel freer to take genuine active risks.
What does this mean for investors?
Small managers may offer higher alpha potential, a more personalised service, and better fee alignment.
A boutique of boutiques
We are often asked: Are you still a boutique? In total AUM terms, with R47bn being managed by AAM, no, we have grown well beyond that. Nevertheless, we are firmly of the view that we are a “boutique of boutiques”.
When considering the sizes of the assets managed in each of the asset management capabilities and funds, they fit firmly into the boutique classification (typically less than R5bn–R10bn in AUM per capability, though this varies by strategy and asset class). This ’boutique of boutiques’ approach allows us to maintain the nimbleness and adaptability of a smaller firm while benefitting from the resources and expertise of a larger organisation.
Each of our investment teams operates independently, with deep specialisation, ownership, accountability and with the agility and attention you would expect from a boutique.
Local and global equities, fixed income, hedge funds, multi-asset, alternatives — every team is sized appropriately. Not too big to get stuck. Not too small to punch below their weight. Like the “three bears” of asset management, we aim to be “just right.”
However, what makes our approach powerful is that we do not operate in silos. Ideas flow across teams. Fixed income informs macro views. Multi-asset collaborates with equities, fixed income, etc. The investment teams collaborate, sharing information, ideas and debating matters.
We have a connected boutique ecosystem. Boutique thinking. Collective wisdom.
Central to enabling this is shared infrastructure — operations, marketing, compliance, finance, IT, etc. All handled centrally to let the investment teams focus on what they do best – generating results. Within our operations and product areas, we have also set things up to be agile. We outsource administration with a range of suppliers, rather than establish our own Linked Investment Service Provider (LISP, financial jargon for an investment platform), collective investment scheme (CIS) management company (ManCo) or other product structures. We partner and use a range of local and global suppliers. This enables us to move quickly and not be constrained by our internal product and administration development capabilities. We outsource what slows others down, giving us the flexibility to plug in or unplug structures as needed.
So what? Why does it matter?
Nimbleness matters because markets shift. Clients evolve. And rigid institutions fall behind. By staying lean, collaborative, and entrepreneurial, we are well-positioned to deliver good outcomes for clients without the drag of bureaucracy.
Our connected boutique ecosystem provides us with the “size premium” advantage, while also relieving the operational, marketing and compliance burdens that weigh down smaller firms. This enhances our ability to stay focused on what really matters: client outcomes.
At its core, asset management has one primary job — to deliver returns above or in line with expectations, at the level of risk it promises. That is simple to say, harder to do. In some mandates, it may be straightforward, but in many, it is a journey, and not always a straight line. Clients do not disappear for five years and check back in at the end. They experience the journey with us. And that is why nimbleness matters: to adjust, to respond, to realign — before it is too late.
Being nimble makes a difference:
- For our clients: Faster responses mean more personalised solutions and real alignment.
- For our teams: Ownership, autonomy, accountability.
- For the business: Structural agility in a world in constant flux.
Nimble is not just a word we like. It is a mindset. Our structure allows us to pivot, adapt, and perform. Nimbleness is no longer optional. It is essential.
The pace of change is not slowing. But we are built, and building, for it. Agile by design, resilient by nature.
“A ship anchored (my insertion) in harbor is safe, but that is not what ships are built for.” – John A. Shedd, from his 1928 book Salt from My Attic.
Anchors are solid and sturdy, not known for their flexibility. They exist to provide stability and reassurance when it is needed most. But their role is not to keep a ship moored forever. The anchor travels with the ship. It lifts when it is time to set sail — to explore, to race, to weather storms — and is there when you need to steady.
That is how we see Anchor, not as something that holds us back, but as the very thing that gives us the confidence to move forward, with purpose and stability.
We remain ANCHORed. Just not ANCHORed down.
