Wealth managers hit by fallout from market fear

Wealth managers came unstuck in the second quarter as volatility swept through markets.

According to initial, estimates by Asset Risk Consultants (ARC), all portfolios across the risk spectrum suffered losses in the three months to June.

Unsurprisingly, the most aggressive category identified by ARC, Equity Risk, posted the largest loss at 8.3%. Steady Growth and Balanced Asset lost 6.3 and 4.1% respectively, while the Cautious category fell by 1.6%.

The declines eradicated the gains of the previous quarter, leaving only investors in the cautious strategy sitting on a gain for the year at 1.2%.

ARC said it is not clear at this stage which wealth managers weathered the storm best.

Those managers which bought in gold are likely to have offered decent capital protection with the precious metal up 13% in the quarter. Managers with sizeable positions in commercial property and conventional bonds should also have offered some protection. 

ARC managing director Graham Harrison said: ‘There was nowhere to hide making it hard to avoid negative numbers. Risk assets which performed well fell back as we moved back from greed to fear.  We expect there to have been more trading than expected as managers struggled to position portfolios in the volatility.’