Wealth Manager Equity Funds Lag Behind Benchmarks, Study Shows

By Warren Giles
     Oct. 8 (Bloomberg) -- The equity funds of about 80 percent of the world’s biggest wealth managers, including Credit Suisse Group AG and Julius Baer Holding AG, lagged behind benchmark index returns over the past five years, a new study showed.
     The study by MyPrivateBanking.com ranked returns at 15 wealth managers offering at least two global, U.S., Europe or Asia equity funds against the Standard & Poor’s 500 index, or the relevant MSCI Europe, MSCI Asia or MSCI World indexes.
     “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,” said Steffan Binder, research director at the Kreuzlingen, Switzerland-based company.
     Total annual fees for investing in the funds ranged from
1.08 percent to 2.35 percent, the study showed. While clients typically also pay 1 percent of their assets in annual management fees, the poor returns were partly due to “bad investment decisions,” Binder said.
     “Clients are losing on performance and they have to pay relatively high fees,” he said. “If I’m paying as much as 4.5 percent a year, I’d want something that clearly gives me above- average performance.”
     Following is a table of the average accumulated profits or losses for the five years through July compared with the benchmark. The MSCI World Index returned 1.7 percent over that period while S&P 500 declined 10.4 percent.

*T
Rank      Firm                Performance

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                                  -14.1%
11   BNP/Parvest                         -14.33%
12   Credit Suisse                        -18.81%
13   Julius Baer                            -20.06%
*T

For Related News and Information:
Stories on Switzerland and wealth: TNI SWISS PW Stories on U.S. stocks: NI USS

--Editors: Dylan Griffiths, Ben Vickers.

To contact the reporter on this story:
Warren Giles in Geneva at +41-22-317-92-02 wgiles@bloomberg.net

To contact the editor responsible for this story:
Frank Connelly at +33-1-5365-5063 or fconnelly@bloomberg.net