As Affiliated Managers Group builds its portfolio of boutiques, adding quant house Chicago Equity Partners last month, its directors must be pleased with the performance of one of its earlier investments – Genesis Investment Management, a London-based emerging markets specialist.

Genesis' profits increased nearly fivefold last year to reach £12.3m (€18.4m), while assets under management soared to $17bn (€13bn) from the $7bn in 2004 when AMG bought a 60% stake in Genesis, according to accounts recently filed at Companies House. Much of the growth has come from strong performance, said Jeremy Paulson-Ellis, chairman of Genesis. He said: "The rise has mostly been market appreciation. We have not really taken on much in new assets in the past couple of years – our focus is to produce good returns for our clients, rather than asset-gathering." Genesis, which scored a decisive victory in Financial News' asset management awards this year beating Morgan Stanley Investment Management and Aberdeen Asset Management, focuses primarily on institutional clients. However, it also runs listed funds, including its flagship $645m emerging markets fund and several specialist vehicles including a Latin American fund and a Malaysian fund.
Demand for Genesis' products has been strong. Not long after the AMG takeover it closed to new money for a year to allow existing clients' commitments to be invested. It reopened last October and has since won mandates from Scandinavian and Dutch pension schemes. Paulson-Ellis said: "We have been encouraged by the interest from continental Europe." Vince MacEntegart, a consultant at Hymans Robertson, said: "We were very interested that it closed to new business. "It is something you tend to look at as a positive thing, because it means it wants to look after the assets for current clients, and is not just chasing assets for its own sake. "We have had one large local authority client with Genesis for a long time, and there have been no issues. There has been a lot of continuity of personnel and it is a good solid house focusing on its core strength." Over three years, shares in the manager's listed global emerging markets fund have risen 41.8% compared with a 34.8% rise in the MSCI emerging markets index. Over five there is a 7.8% outperformance. Performance has slipped a little this year, with the fund 0.6 % behind the index year-to-date. Paulson-Ellis was relaxed about the fall-off in returns. He said: "That does not surprise me. Genesis tends to underperform when there are extremely heavy flows into emerging markets, which is usually non-specialist money, or momentum investing. That is not what we are about. We are bottom-up stock-pickers." With a record of good returns and the business generating profits for its owners, the main issue facing Genesis is likely to be succession planning. One consultant said: "With the change in ownership to AMG, founding members may have seen it as an opportunity to cash in their chips. Often these deals will include lock-in periods for three or five years. "The deal was signed in January 2004, which means you might see some people leaving over the next couple of years." Paulson-Ellis would not comment on the length of any lock-in clauses.