Conventional wisdom states that being first to market has significant benefits. Just think of Coca Cola, an enduring, iconic product. Many fizzy drinks companies have emerged since Coke, but none with the history, the story or the magic that Coke has. By being the first, Coke shaped not only consumer tastes but also the very idea of what a fizzy drink should be. Most consumers are risk adverse. Supermarket own brand cola is less than half the price of Coca Cola, but this doesn't make a significant dent in Coke's huge market share. When consumers find something they like they remain incredibly loyal, giving an edge to first movers who snap up market share. However, a study* into first-mover advantage seems to suggest otherwise, particularly when it comes to longevity; only 30% of pioneers beat late-movers in the long term.
By sitting back, watching and waiting, second movers can both avoid the mistakes made by pioneers and also improve upon the current offering. Second movers also benefit consumers. For a product to come on the market and successfully challenge a dominant pioneer it has to do the job better or cheaper. This creates competition and encourages innovation. Apple has never been the first with any of their products; MP3 players existed before iPods, and the iPhone was long predated by the Blackberry and other smartphones. What Apple does is to see advantage in the deficiencies of existing products and innovatively improve them, making them more desirable and more user friendly. Steve Jobs himself said "Picasso had a saying: good artists copy, great artists steal. And we have always been shameless about stealing great ideas".
With this in mind, Aurum Fund Management Ltd. (“Aurum”) will be launching the Aurum Dynamic Strategies Fund in the New Year; Aurum’s first ever multi-manager, multi-strategy Fund of Alternative UCITS Funds. More than a decade after the first multi-manager Alternative UCITS funds were launched, Aurum is finally establishing its late mover status.
Why Alternative UCITS and what advantage is there in acting now? In a word: choice. After a decade of growth there is now a greater choice than ever of managers and alternative investment strategies from which to build a robust and enduring portfolio. In the last six years there has been a tenfold increase in the number of Alternative UCITS funds; Aurum Research Limited currently tracks over 400. Whereas in the past my colleagues and I had expressed concerns about the robustness of some Alternative UCITS funds, we feel there is a lot more to be positive about today. Whilst we weren't confident enough in the investment opportunities available for Aurum to pioneer a multi-manager fund of Alternative UCITS a few years ago; we are now.
There are fewer and fewer truly original ideas. We like to think that Aurum will have a "best mover advantage". Aurum has waited for the right time to launch a fund which embodies Aurum’s DNA and is capable of delivering the same stable, uncorrelated returns that Aurum has successfully delivered for over 21 years.
*Source “Are there First-Mover Advantages in B2B eCommerce Technologies?” by Gezinus J. Hidding & Jeffrey R. Williams 2003