The announcement last month that the Wellcome Trust, the UK's largest charitable foundation, was investing over $500m in NewSmith Asset Management capped a remarkable period for the boutique which has yet to celebrate its third birthday.

The firm manages more than $5.5bn in assets and the funds from the Wellcome Trust will help it in its next stage of growth, according to Stephen Zimmerman, partner and head of asset management. Given the trust is one of the savviest institutional investors around, the deal marks a vote of confidence in the abilities of Zimmerman and the other founders of NewSmith, Paul Roy and Michael Marks. In a short period they have succeeded in attracting some top talent to NewSmith, led by Steve Thompson, the firm's UK equity investment leader who joined from Merrill Lynch Investment Managers in 2004 to help launch the firm's asset management business. Zimmerman said the funds from the Wellcome Trust would help it compete for other talented managers in a tough hiring market. Zimmerman was one of the architects of Mercury Asset Management, which grew to be the dominant force in UK fund management before being sold to Merrill Lynch. His goal with NewSmith is to build a firm that is true to the philosophy that delivered huge growth to Mercury during the 1980s – giving talented managers freedom to invest, and rich rewards for success. Due to the strong record of Thomson's UK equities team at Merrill Lynch, investment consultants have been quick to back NewSmith despite it being effectively a start-up. Among client wins for its long-only product last year was a mandate from the BBC pension fund. The team also manages long-short portfolios. Other strategies include European credit, Asian equities, private equity and a long-short global opportunities fund run by former proprietary traders from Merrill Lynch. The boutique might seek to launch a fund in distressed debt when the credit cycle starts to turn. NewSmith won the award by a narrow margin from Neptune Investment Managers, set up in 2002 by Robin Geffen. Neptune has produced stunning performance in global equities in the past couple of years by running concentrated stock portfolios which have been heavily invested in emerging markets and natural resource stocks.