Asset managers turning themselves into multi-boutiques may be making a dreadful mistake. The operating model is too complex to work efficiently in the global environment of the investment management industry, according to a new report*.

Most of the 102 asset managers canvassed for the report admitted they found it hard to replicate the operating leverage they had in their home market. Amin Rajan, chief executive of Create Research and author of the report, identified the complexity of operating models, due to accidents of history and geography, as a significant hindrance to efficient globalisation.

Most controversially, he identified the multi-boutique model as one of the models least likely to survive in a globalised market. Along with what are termed "joined-up franchises", such as the big wealth managers, he claimed multi-boutiques "have been the focal points of dysfunctional tensions created by the familiar law of unintended consequences".

He characterised multi-boutiques as asset management firms with small boutique-style managers, each with its own brand, full autonomy, global clients and an equity stake in its own company.

Mr Rajan predicted that multi-boutiques would soon see buy-outs as their component companies opt to go it alone rather than deal with the bureaucracy of being part of a network.

Jon Little, vice chairman at an exponent of the multi-boutique model, BNY Mellon Asset Management, was startled at the idea that it might be on the way out. "It's completely counter-intuitive," he said. "A lot of companies are busy turning themselves into multi-boutiques." However, he admitted the model was not an easy one to get right.

In recent years, fund management companies have begun looking outside their home markets both for new clients and higher returns. Although most of those surveyed claimed that globalisation had made it easier to do cross-border business, many have found it difficult to translate that into benefits to the bottom line.

"Like anything involving fundamental business evolution, the global footprint comes at a price," said Mr Rajan. "Examples of missed opportunities and mutual misunderstandings are to be expected."

The model Mr Rajan approves of most is a "networked business", such as bonds house Pimco.

Although it could be described as being itself part of a multi-boutique structure in its relationship with Allianz Global Investors, Pimco has maintained a coherent company structure and culture throughout its existence.

"We've evolved in the last 10 years from a more US firm to a much more global company," said Joe McDevitt, head of Pimco Europe. He said this growth had been built on a solid concept of how the business works: "We think about the business as being a stool with three legs on it." Those legs are investment management, the business side and account management, and dealing with clients.

Although Mohamed El-Erian, erstwhile Pimco emerging markets head, is about to return as co-chief executive after two years at Harvard Management Company to develop new directions for the company, this does not signal a plan to diversify into other asset classes.

Pimco was working on a number of new product areas, said Mr McDevitt, but these were all linked in some way to its fixed income expertise.

Is there a single answer? "The study raises some interesting points," said Peter Bain, senior executive vice president at Legg Mason, which sponsored the research together with Citi. "The most interesting point is that it's very difficult to do this and do it well."

*Globalisation of Funds: Challenges and Opportunities.