Most Equity Funds of Wealth Managers Disappoint
The equity fund returns of the 15 biggest wealth managers and banks worldwide are mostly worse than the respective benchmark indices. During the last 5 years about 80% of the funds have returned below average returns.
The analysis of the providers who offer at least two relevant funds in the respective regions showed the following average accumulated profits/losses over a period of five years (in comparison to the benchmark indices, status as of end July 2009):
1) Deutsche Bank/DWS: +4.36%; 2) Black Rock (Merrill Lynch): +3.97%; 3) Lombard Odier: +1.03%; 4) UBS: -4.84%; 5) Credit Agricole: -5.31%; 6) HSBC: -7.53%; 7) JP Morgan: -9.02%; 8) BNP/Fortis: -10.00%; 9) Morgan Stanley: -13.32%; 10) Pictet:
Two other wealth management companies did not have a sufficient number of relevant funds that qualified their inclusion in the analysis.
In case of equity funds focusing on the USA, five providers could at least outperform the index. In the case of those focusing on Europe only three could outperform the index. And in case of funds focusing on Asia all the providers performed worse than the index.
"It is a known fact that funds generally perform worse than the respective indices but the fact that the self-claimed wealth management specialists have performed so much worse than the market, is very disappointing"
The total expenses of the analysed funds were between 1.08% and 2.35% of the investment amount per year but this is not the only reason for the bad result according to Christian Nolterieke, Managing Director of MyPrivateBanking.com:
The analysts of MyPrivateBanking.com hence recommend the clients of wealth management companies to invest only in those funds that have given above-average returns over a period of many years or to invest in so-called passive index funds (ETFs). Furthermore, clients should demand complete transparency from their advisors concerning the allocation, the quality and the costs of funds in their portfolio.
About the study:
For the study, MyPrivateBanking.com analysed those equity funds with "Global", "USA", "Europe "and "Asia" focus managed by fund managers, which are completely or partially a part of or associated with the 15 biggest wealth management companies of the world. Only those funds that have published data including the returns and costs of at least 5 years (from July 2009) were included in the ranking. All performance data were taken directly from documents of the providers. For the overall ranking, the growth of fund returns was compared to that of the respective benchmark indexes for the regions (S&P 500, MSCI Europe, MSCI Asia, MSCI World), the differences are accumulated and divided by the number of funds for arriving at the average. For being included in the overall ranking, the providers should have had at least two funds that meet the selection criteria. The study includes a detailed description of the methodology as well as explicit rankings per region and can be downloaded at www.myprivatebanking.com.
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