For strong-performing boutique asset managers, the spotlight usually shines on portfolio managers: the stars whose decisions drive returns. And deservedly so. Yet behind every strong performance is a quieter, equally critical engine: fund operations. From trading and reporting to regulatory compliance and data management, this behind-the-scenes work often determines whether a fund can scale successfully. For growing boutiques like Protean Funds and Kvartil, operational challenges are multiplying with growth. At the same time, advances in AI and automation are creating opportunities to reduce manual workloads, enabling asset growth without proportionally increasing headcount.
For stock-picking boutique Protean Funds Scandinavia, “the biggest operational challenge right now is the added complexity that’s come from taking on more portfolios and resulting additional counterparties over the last couple of years,” says COO Daniel Mackey. “Each new relationship adds more data flows, reconciliations, and oversight, and that compounds quickly in a small organization,” adds Mackey, whose boutique runs three individual funds and a couple of separately managed accounts. “A lot of my focus at the moment is on removing manual steps and making sure we’re getting full value out of the systems we already have.”
“Each new relationship adds more data flows, reconciliations, and oversight, and that compounds quickly in a small organization.”
Daniel Mackey, COO at Protean Funds Scandinavia.
Beyond the challenges of scaling and managing increasing data complexity, boutique managers must also navigate the changing regulatory landscape. On top of that, new regulation is impacting smaller boutique managers such as Protean Funds, with DORA being a good example. With regards to DORA, Mackey explains that “the intent is good, but the workload is the same whether you’re a small portfolio manager or a major bank.” The implementation of this regulation duplicates a lot of work. “Most of us use the same critical suppliers such as AWS or Bloomberg, yet each firm still has to run the full due-diligence process individually,” explains Mackey. “That’s a challenge for anyone with a lean operational setup.”
To tackle these operational hurdles, Protean Funds is focusing on strengthening internal technical expertise and enhancing its underlying data infrastructure. “We’re adding more technical competence internally and building a better data structure so we can report and scale without creating more operational drag,” Mackey explains. The firm sees its biggest opportunity in “continuing to build on the foundation: streamlining workflows, reducing manual work, and creating a more organized data environment,” he adds. A recent hire with automation and technical expertise has further strengthened the team. “We’re now in a better position to advance that work, and once it’s in place, it becomes much easier to adapt when our portfolios or priorities shift,” Mackey notes.
The operations team at another successful Stockholm-based boutique, Kvartil, faces challenges similar to those at Protean Funds. “Our single biggest operational challenge today is maintaining a clean, consistent, and timely data foundation across the entire value chain, from trading and risk to client and regulatory reporting, while the firm grows in products and jurisdictions without increasing headcount at the same pace,” says Chief Operations Officer Jacob Werkell. As a specialized asset manager, Kvartil operates a deliberately lean organization. “That means every new regulatory requirement, distribution partner, or data source adds complexity very quickly,” Werkell acknowledges. “If we are not careful, that can lead to fragmented data, manual checks, and spreadsheet workarounds.”
“Our single biggest operational challenge today is maintaining a clean, consistent, and timely data foundation across the entire value chain, from trading and risk to client and regulatory reporting, while the firm grows in products and jurisdictions without increasing headcount at the same pace.”
Jacob Werkell, COO at Kvartil.
Similar to Protean, Kvartil is dedicating significant time, effort, and resources to building a scalable data backbone. “This approach reduces operational risk, enhances auditability and regulatory readiness, and allows Kvartil to grow without having to double the size of the operations team,” Werkell explains. “Our greatest opportunity lies in combining a modern, cloud-based data and system architecture with intelligent automation and the selective use of AI,” he adds. “This helps reduce manual work, improve data quality, and lessen our reliance on old legacy systems.”
Daniel Mackey at Protean also sees potential long-term benefits from AI and other automation tools. “But for us, the real value will come once the data is in good shape,” he acknowledges. “It could be interesting down the line, and we’re open to those developments, but we’re not relying on them at this stage.”
Mackey believes the greatest opportunity to enhance an asset manager’s efficiency, resilience, and scalability lies in shared infrastructure. “The industry would benefit from more shared infrastructure around operational resilience,” he argues. “Even something as simple as a central register for key ICT suppliers, rather than each small firm running the same vendor checks, would save a lot of time,” he adds. “Until such solutions are in place, our focus remains on staying scalable, resilient, and nimble.”
“The industry would benefit from more shared infrastructure around operational resilience.”
Daniel Mackey, COO at Protean Funds Scandinavia.
The operational backbone of boutique asset managers is as crucial to success as the performance of portfolio managers. For firms like Protean Funds and Kvartil, growth brings complexity, but also opportunities to innovate through automation, smarter data management, and streamlined workflows. While regulations and increasing counterparties present ongoing challenges, building a robust, scalable, and technologically advanced operations framework ensures these boutiques can continue to deliver strong performance without compromising efficiency or resilience. Ultimately, investing in operational excellence is investing in the sustainability and scalability of the fund itself, the silent driver behind every standout performance.
