Private Client Wealth Management
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FINANCIALTIMES|SaturdayJune20 /SundayJune212015 Private Client Wealth Management An FTMoney Guide The robo advisers are coming How to find your wealth manager No way back for bonds? But what effect will they have on the £1.1tn UK An adviser should offer more than just Yields are so low that many industry watchers wealth management market? investments, experts say believe the only way is up PAGE 4 PAGE 7 PAGE 11 2 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 PRIVATE CLIENT WEALTH MANAGEMENT The elusive search for alpha continues OVERVIEW resulted from years of quanti- “This is a situation where horizon to indicate that the Wealth managers tative easing, in which the activemanagersandmanagers equity bull market is over, world’scentralbankshavecol- who take a specific approach although we may have a sum- move higher up lectively injected billions into toinvestmentshouldshine.” merdipaswehaveinthepast,” the risk curve markets across the globe. The Until that shift occurs, port- says Canaccord’s chief invest- FTSE All World, for example, folio construction presents mentofficer,NigelCuming. JUDITH EVANS has been on a rising trajectory particular challenges, espe- PSigma, by contrast, rejects The past three years have not since late 2011, gaining almost ciallyatthecautiousend.“The the increased equity alloca- been straightforward for 60 per cent. The volatility of only real cautious portfolio tions adopted by some rivals, investing. Less than 20 per equities has fallen, while that these days is cash — or a port- instead seeking yield through cent of wealth managers’ of bonds has risen, even as foliothatisveryhighlydiversi- quality fixed income and spe- portfolios have added positive bond yields became tightly fied,”arguesMrBecket. cialist credit, while protecting alpha, according to figures compressed. Among balanced portfolios, against inflation through from Asset Risk Consultants, “Mixed asset portfolios are Canaccord Genuity Wealth index-linked bonds and com- against 50 per cent that gener- converging in terms of risk, Management has the largest modityholdings. ated negative alpha in the and differentiation of invest- allocation to UK and interna- Across the board, corporate threeyearstotheendof2014. ment styles from a pure vola- Growth — a chance for fund managers to shine — iStock tional shares, according to this bond allocations have fallen: This was not down to any tility point of view is becoming year’s Financial Times wealth among wealth managers sur- risk aversion: portfolios have extremely hard,”says Graham End investors have made future. We think markets management survey, with veyed, the mean allocation in been steadily squeezed up the Harrison, group managing returns, but they could also are going to become much 69 per cent in the asset class. balanced portfolios has fallen risk spectrum, according to directoratARC. have made those in simple more investment specific, Thiscompareswithanaverage to 17 per cent from 19 per cent ARC, with cautious portfolios “Skill hasn’t really been portfolios of tracker funds. Is regional and sector specific,” of 49 per cent and a low of a year ago. In growth portfo- containing high equity alloca- to the fore since the financial that set to change? “I’m says Tom Becket, chief invest- 20 per cent, held by GHC Capi- lios, it is down slightly from 11 tions. crisis took place and the very much a believer that the ment officer at PSigma Invest- talMarkets. percentto10percent. The unusual climate has liquiditytapswereturnedon.” past is not a prologue to the mentManagement. “There’s nothing on the Charles Stanley, Rothschild Performance Average % performance of balanced portfolios invested on behalf Average % performance of capital growth portfolios invested on behalf of UK private clients (cumulative, not annualised) to end 2014 of UK private clients (cumulative, not annualised) to end 2014 Wealth manager Over 1 year Over 3 years (cum) Over 5 years (cum) ARC verified Over 1 year Over 3 years (cum) Over 5 years (cum) ARC verified Adam & Company 4.6 28.4 47.1 X 4.4 33.6 54.3 X Arbuthnot Latham 7.2 32.1 42 7.2 38.5 N/A Barclays Wealth and Investment Management 3.5 21.4 N/A X 4.4 28.2 N/A X Brewin Dolphin 7.16 30.67 N/A 6.25 37.03 N/A Brooks Macdonald Asset Management 5.12 26.77 36.9 X 4.87 29.51 39.33 X Canaccord Genuity Wealth Management 5.48 33.52 47.52 6.85 39.6 54.73 Cazenove Capital Management 3.1 25 36.3 X 3.5 30.5 43 X Charles Stanley Group PLC 3.37 26.37 32.39 3.93 35.44 41.47 Citi Private Bank 3.11 27.46 42.4 3.79 42.2 55.01 Close Brothers Asset Management 4.41 22.16 35.79 3.81 25.79 38.13 Duncan Lawrie Private Bank 4.69 27.43 38.65 X 4.02 28.68 39.58 X Equilibrium Asset Management LLP 5.51 33.15 40.55 X 5.12 34.95 41 X GAM 3.33 30.33 34.56 X 2.72 38.98 44.46 X GHC Capital Markets Ltd 6.98 21.6 25.64 5.16 24.71 32.65 Heartwood 2.8 26.6 35.6 X 2.8 36.7 44.2 X Ingenious Asset Management 5.7 20.7 33.1 X 6.8 25 38.4 X Investec Wealth and Investment 4.6 28.2 39.9 X 4 32.6 45 X Investment Quorum Ltd 4.51 25.54 35.53 5.52 35.19 43.61 James Hambro & Partners 6.06 30.26 N/A X 6.04 33.75 N/A X JM Finn 3.6 30.9 47.8 X 2.9 29.9 44.2 X London & Capital 6.7 27 N/A 7.1 44.3 N/A McInroy & Wood Ltd N/A N/A N/A 7.3 33.1 57.3 PSigma Investment Management 2.87 25.05 30.63 X 3.33 30.94 38.33 X Quilter Cheviot 4.75 27.98 42.24 5.66 37.11 49.51 Rathbones Investment Management 5.68 29.15 41.56 X 4.06 32.14 46.58 X RBC Wealth Management 3.31 24.23 35.62 X 3.64 29.9 42 X Redmayne-Bentley -2.52 27.99 45.13 X N/A X Rothschild Wealth Management 7.52 30.05 40.94 X 8.13 35.45 47.07 X Ruff er LLP 4.2 21 41.1 X N/A N/A N/A X Sarasin & Partners 7.45 30.51 37.52 X 7.15 33.56 40.93 X Saunderson House Limited 5.5 32.7 43 X 5.7 36.7 47.8 X Seven Investment Management 5.96 29.74 35.94 X 6.44 37.56 42.94 X St. James’s Place 6.54 28.93 N/A 6.19 44.94 N/A Smith & Williamson 6.03 24.72 41.58 X 5.06 32.21 48.89 X Stanhope Capital 3.3 19.7 30.6 4.2 24.2 34.4 Thesis Asset Management 5.55 28.88 40.63 X 5.82 33.34 43.84 X Tilney Bestinvest 5.8 31.9 39.8 X 5.1 37.4 48.1 X Waverton Investment Management Limited 5.02 24.88 34.62 X 6 30.73 43.34 X Average 4.82 27.38 38.52 5.14 33.73 42.91 Max 7.5 33.5 47.8 8.1 44.9 57.3 Min -2.52 19.70 25.64 2.72 24.20 32.65 Notes: ACPI Investments, Killik & Co, Lombard Odier and UBS Wealth Management did not disclose figures FINANCIAL TIMES Saturday 20 June 2015 FTMoney | 3 PRIVATE CLIENT WEALTH MANAGEMENT and Ruffer are all among the large chunks of short-term Investec is limiting maturity both property and infrastruc- first such trust to come to the opportunities for alpha gener- firms with zero holdings of northern European govern- and credit risk, and holding ture in recent years, “yield market, although Mick Gilli- ation. corporate bonds in their bal- ment debt traded at unprece- many bonds to maturity, compression in prime gan, head of fund research, “We are coming up to some anced portfolios, as the asset dented negative yields, avoiding the effects of any sell- property investments is a cautions: “It is very early days sort of crunch point, though class is challenged by low although that trend has since off. cause for concern, as are the in this area, and it will take we don’t know what form that yields, liquidity worries and goneintoreverse. So-called “alternative” asset premiums to net asset value at time and probably a recession willtake,”hesays. volatility. One firm taking a different classes have benefited from whichthesharepricesofinfra- toprovideaproperstresstest.” “In the future, we’re not James Maltin, chief invest- approach is Investec Wealth, the hunt for yield. Allocations structure funds trade”, Mr In the meantime, many going to get a situation where ment officer at Rathbones, which holds 28.5 per cent in to hedge funds are up slightly Maltinsays. wealthmanagersbelieveanew equities are less volatile than says: “We have reduced our government bonds thanks to a on last year, as are private Income seekers have also investment environment is bonds for any period, and position in conventional “bar-belling” approach which equityholdings. looked to newer asset classes, approaching, potentially to we’re not going to get a situa- bonds with a preference for aims to exploit negative corre- Rathbones has increased its suchaspeer-to-peerdebt,now be sparked by the long- tion where skilful managers short-dated index-linked gov- lations between bonds and positions in asset classes accessible through a series of awaited rise in US interest selecting the best companies ernment bonds .