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  1. Wealth
January 5, 2012

ARC: Every portfolio model lost money in 2011

By Spear's

Private client portfolios across every risk bracket lost money last year, according to figures published yesterday by Asset Risk Consultants (ARC)

by Freddy Barker

Private client portfolios across every risk bracket lost money last year, according to estimates published yesterday by Asset Risk Consultants (ARC). From the most conservative with relative risk of 0-40 per cent world equity markets (down 0.9 per cent) to the most aggressive with 80-110 per cent (down 7 per cent), no model showed a gain.

This is the second time in five years that private client portfolios have declined year on year. The other – 2008 – was significantly more severe, with losses ranging from 3.98 to 21.82 per cent.

When comparing the two, Daniel Hurdley, head of ARC Research Services, said, speaking exclusively to Spear’s: ‘2011’s recorded range of around +/-4% in a month is not extreme. In 2008 we had four months bigger than that. Markets range traded as opposed to there being any strong directional momentum, with risk-on, risk-off trade dominating over the year.’

Considering the persistent economic bad news – from the Middle East’s revolutions to Japan’s earthquake to Europe’s debt difficulties – these falls are perhaps unsurprising.

‘In aggregate, the results reflect the fact that private client investment managers tended to underweight government bonds and overweight emerging markets,’ explains Hurdley. ‘In 2011, this position would have caused a performance drag particularly versus benchmarks with heavy weightings to gilts.

‘Caution was the watchword. Managers generally seemed to start off the year cautiously optimistic, but the second half of the year was probably the reverse, cautious pessimism.’

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Click here to view the full ARC Private Client Indices Performance Estimates for Q4 2011

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