Private Client Wealth Management an FT Money Guide
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FTWEEKEND Saturday June 15 / Sunday June 16 2013 Private Client Wealth Management An FT Money Guide Managers face tough choices in new era of financial advice Chris Tosic Equities Bonds Charging Waiting for the Great Rotation What’s the alternative? Set fees dominate Pages 2 & 3 Pages 6 & 7 Page 15 2 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 3 Money guide: Private client wealth management Money guide: Private client wealth management unwound, all of these asset phenomenon of ‘boring but Dull but classes are likely to benefit worthy’ sectors such as util- worthy? from supportive macro pol- ities, healthcare and con- Unilever and Great rotation? More like a capitulation icy and technical condi- sumer staples leading the the like tions. However, this is not a market higher in the recent have led signal to charge into high- rally,” he says. Shares in the market for risk is slowly emerging survey of wealth managers saving rates on offer. the financial data provider, best-selling sector for indi- beta stocks, but to remain companies like Diageo, Uni- higher Strategies among private investors. bear this out. Most manag- “Before the crisis, cash highlight how far cash rates vidual savings accounts focused on high-dividend lever and GlaxoSmithKline Bloomberg While there has been a ers have increased exposure deposits paid about 6 per have fallen. The average money in the most recent companies for equities and are trading at relatively Investors are rise in flows into the stock to equities, but this has not cent and inflation was sig- one-year fixed-rate bond tax year was the sterling rising stars in the high rich multiples. market this year, most generally been at the nificantly below that, so paid out 5.73 per cent in strategic bonds, according yield and emerging market Becket says private inves- switching out of experts put this down to expense of bonds – alloca- investors didn’t really have June 2007, compared to 1.66 to the body, which repre- debt space,” he says. tors have given up on the cash into riskier investors moving money tions to fixed income have to take any decision. You per cent today. sents the open-ended funds Kevin Gardiner, chief quest for growth over the from cash, rather than increased too. Cash is the could happily sit on that While some cash has gone industry in the UK. investment officer for last few years, as they have assets, writes bonds, as investors tire of only asset class to see year- and not really bother with into equities, wealth man- According to Sanjay Europe at Barclays, is scep- become increasingly Tanya Powley rock-bottom deposit rates. on-year declines. investing,” she says. agers note that it has not Joshi, head of fixed income tical that private investors obsessed with income. He “There is no clear sign of Experts say the exit from However, with cash rates yet resulted in the much-an- at London & Capital, the will ever opt to sell their notes that emerging mar- a decisive move away from cash is long overdue. Susan plummeting in recent years, ticipated “death of bonds”. discretionary wealth man- bond holdings. “Where they kets, for instance, have fixed interest by investors,” Boyd, investment director investors have had to take Figures from the Invest- ager, alongside equities, own them, in many cases underperformed developed Talk of a “great rotation” notes Tom Becket, chief at wealth manager Adam & on more risk if they want to ment Management Associa- high yield and emerging those bonds have done such equities for much of the from bonds to equities is investment office at Psigma Company, says investors achieve a real return on tion corroborate the find- market debt has attracted a good job for investors in past two years. However, as premature, say wealth man- Investment Management. have been forced up the their money, says Boyd. ings of FT Survey of Lead- new investment. “As cash maintaining and growing most of the obvious “value” agers, but a greater appetite The results of our annual risk curve due to the paltry Figures from Moneyfacts, ing Wealth Managers. The holdings are further their real wealth that they investments have become are almost viewed as family expensive he says it is time retainers,” he says. to focus on longer term Performance “Our advice is to focus on opportunities. % total returns of balanced portfolios % total returns of capital growth portfolios other investments for new Nick Murphy, investment money but realistically management partner at Wealth manager Over 1 year Over 3 years Over 5 years Over 1 year Over 3 years Over 5 years we’re not going to see many Smith & Williamson, Adam & Company † 10.3 27.4 22.9 11.11 29.53 22.56 private clients dumping agrees. “The valuations of Arbuthnot Latham & Co., Limited 12.85 14.02 4.97 12.75 15.88 6.16 stocks in many of these so- called defensive sectors are Ashcourt Rowan 7.8 11.5 7.1 7.1 ‘A rare phenomenon becoming stretched relative Berry Asset Management PLC † 9.8 19.3 16.2 13.8 of boring but worthy to history – the adage that Brooks Macdonald Asset Management † 9.4 18.1 14.6 9.6 17.9 12.6 there is no sector that can’t Brown Shipley 13.8 19.7 9.2 10.1 12.9 7.5 sectors, such as be ruined by too much C. Hoare & Co. † 8.7 22.4 19.2 11.8 24.9 14.9 utilities, leading the money is starting to be a Canaccord Genuity Wealth Management 9.27 23.5 21.1 7.52 22.8 15.9 concern,” he says. market higher’ So where are the long- Cazenove Capital Management † 9.4 19.5 19.8 10.7 22.1 17.3 term opportunities? Becket Charles Stanley Group PLC 29.6 30.8 points towards under-priced Citi International Personal Bank, UK 8 21 24 9.5 23 23 growth companies in City Asset Management Plc † 8 14.5 16.3 8.3 20.3 29.2 bonds wholesale,” adds Gar- Europe, Japan and the Coutts 5.8 11.3 12.8 diner. emerging markets. “Some David Absolon, invest- of these assets, such as Dart Capital 6.71 10.75 10.1 16.4 ment director at Heart- industrial and financial Duncan Lawrie Private Banking † 10.7 21.1 10.8 26.9 wood, agrees. “Investors companies, are trading on Equilibrium Asset Management 11.1 17.3 23.4 11.7 16.7 remain desperate for relative valuations that GHC Capital Markets Limited 15.43 22.59 25.74 20.8 35.27 29.46 income and bonds, while have rarely been seen Greystone Financial Services 14 20.3 9.1 13.1 22.4 20.8 producing low yields by his- before and present out- toric standards, are still standing value,” says Heartwood Investment Management 7.9 15.5 17.5 10.7 16.7 19.1 producing returns. In some Becket. Ingenious Asset Management † 7.03 17.98 12.59 7.89 19.46 11.87 sub-asset classes these are Many wealth managers Investec Wealth & Investment † 10.43 20.72 16.77 11.61 21.92 14.88 still compelling in the cur- believe long-term opportu- Investment Quorum Ltd 10.87 17.77 20.64 11.95 19.17 19.2 rent climate.” nities lie in Europe and JP Morgan Private Bank This focus on yield has Japan. Citi Private Bank led more investors to the has been overweight in Jupiter Asset Management † 8.47 18.03 8.92 17.68 stock market. According to Japan over the past year Killik & Co Becket, most new money and continues to remain Kleinwort Benson † 7.92 18.89 7.57 17.69 coming into equity markets positive on the market Lombard Odier & Cie. has focused on high quality, there, says Alexander God- London & Capital Asset Management Ltd 9.3 15.1 9.1 14.8 defensive equities. win, global head of asset “This has led to a rare allocation at the bank. McInroy & Wood Ltd † 11.4 30.4 44.8 11.4 30.4 44.8 NW Brown Psigma Investment Management † 7.51 16.22 18.89 7.88 17.11 17.02 Quilter Cheviot † 9.15 21.18 18.85 10.58 21.36 12.59 Cashing out Rathbone Investment Management 9.35 22.8 23 10.3 22.9 21.3 The move of money out of had fixed-term cash RBC Wealth Management † 9.48 19.52 28.86 10.89 21.22 26.26 cash savings into riskier deposits that have recently Redmayne-Bentley assets will gather pace in expired and where current Rothschild † 7.7 16.2 20 7.4 13.6 12.4 the coming year as private rates are pathetically low.” Ruffer LLP 4.6 22 59.8 investors fight a losing Susan Boyd, investment Saunderson House Limited 11.09 20 21.38 11.75 19.52 16.73 battle against inflation, director at wealth manager Schroders Private Banking * † 4.4 13.2 16.4 6.6 13.9 15.8 writes Tanya Powley. Adam & Company, says Savings rates have fallen savings rates have Seven Investment Management † 9.22 14.02 15.47 10.47 14.8 13.85 from almost 5.75 per cent worsened in the past year, SGPB Hambros 7.76 16.32 28.67 8.16 14.94 11.08 for a one-year fixed-rate largely as a result of the Smith & Williamson † 10.17 24.69 30.5 10.66 23.95 30.02 bond in June 2007 to Funding for Lending scheme Thurleigh Investment Managers around 1.66 per cent today, launched last August.