UK Private Wealth Portfolios Down By Up To A Third

[Newroad]

Morning All.

I found this headline from the FT somewhat astounding

https://www.ft.com/content/55e3156a-20f1-421e-a5a2-7b842135fc05

It opens with

"The real value of UK private wealth portfolios has fallen by as much as one-third on average in the first nine months of this year ..."

I haven't done an exact calculation, but a back of the postage stamp one would suggest absolute losses of around 25% and the rest down to inflation. Compare this to (say) the average self-directed private investor, e.g. on II, who quote such figures, of about 12%. I suppose it's better than the average US retail investor who, if the JP Morgan data cited earlier is to be believed, were down around 44% over the same period.

I wonder though, what the typical so-called private wealth manager has been investing in to generate this level of negative return? I wonder if there may be an element of private equity being marked to (lower) market in a rising interest rate environment?

Regards, Newroad

[scrumpyjack]

Reminds me of the old joke about a wealth manager being someone who manages your money until it has gone!

[BullDog]

I suppose the extra layer of charges is also unhelpful to the wealth manager portfolios. I understand that in some cases there's two extra layers. One charge from the wealth management firm and another layer of charges from the discretionary investment portfolio manager appointed by the wealth management firm. Such an arrangement to me begs the question "what does the wealth manager actually do"? But I think these days it's a common enough arrangement.

[NotSure]

Reading the article, they're down an average of 10% nominal which sounds more reasonable. The 30% includes inflation and sterling depreciation, so I assume they mean 30% in dollar terms?

[88V8]

Back in the days when we used two 'wealth managers', I found they underperformed in the good time and outperformed in the bad times no doubt due to their relatively conservative investment choices. I would be surprised if that had materially changed, but perhaps they too have been chasing the yield.

V8

[Newroad]

Hi NotSure.

I didn't read

"... the slide in sterling against the US dollar added to the damage ..."

as you did. I believe they intend as I suggested in the OP - but that the slide in sterling was a contributing factor. I can't imagine they are expressing UK wealth in dollar terms.

Regards, Newroad

[NotSure]

Hi NotSure.

I didn't read

"... the slide in sterling against the US dollar added to the damage ..."

as you did. I believe they intend as I suggested in the OP - but that the slide in sterling was a contributing factor. I can't imagine they are expressing UK wealth in dollar terms.

Regards, Newroad

Hi,

me neither, but it was the only way I could add inflation to 10% and end up with 30%. Probably just sloppy, imprecise journalism!

Edited to add, the slide in Sterling has (kind of) been beneficial to me as a UK resident and I am sure to most other investors too as it has (sort of) cushioned the fall in the nominal value of dollar denominated assets, which I suspect tend to make up a good part of most portfolios these days.

[NotSure]

Same info as FT article reported here (but doesn't tell me off if I cut and paste).

https://ukdaily.news/uk-private-wealth-portfolios-down-by-up-to-a-third-179747.html

The real value of UK personal wealth portfolios has fallen by up to a third on average in the first nine months of this year as investment losses, inflation and the weak pound have combined to weigh on people’s purchasing power.

UK wealth management portfolios fell an average of about 10 percent in the year to the end of September, but appreciation [think they mean inflation] and the sterling’s decline against the US dollar contributed to the damage, according to an analysis by Asset Risk Consultants (ARC). returns from strategies managed by over 100 major UK money managers.

The figures underscore that the tangible losses in investment portfolios are just part of the devastation to real wealth that inflation and currency movements have wreaked on UK investors this year.

“It will be very difficult for investors to come to terms with the fact that they have just seen a third of their wealth gone. It’s a pretty bitter pill to swallow,” said Graham Harrison, ARC’s Managing Director.

Harrison said investors tend to think about their wealth in terms of a fixed number and don’t mentally adjust when the purchasing power of those assets changes.

Inflation, which has soared to a four-decade high this year, means the “money illusion has returned with a vengeance,” Harrison added......

[ADrunkenMarcus]

Same info as FT article reported here (but doesn't tell me off if I cut and paste).

https://ukdaily.news/uk-private-wealth-portfolios-down-by-up-to-a-third-179747.html

The real value of UK personal wealth portfolios has fallen by up to a third on average in the first nine months of this year as investment losses, inflation and the weak pound have combined to weigh on people’s purchasing power.

UK wealth management portfolios fell an average of about 10 percent in the year to the end of September, but appreciation [think they mean inflation] and the sterling’s decline against the US dollar contributed to the damage, according to an analysis by Asset Risk Consultants (ARC). returns from strategies managed by over 100 major UK money managers...

Thanks for sharing.

I checked my own accumulation unit data and I was down about 1.5 percent on an all-equity portfolio since 10 January 2022. Pointless to compare, perhaps, but it warmed my cockles!

And for long term investors - keep buying at cheaper prices!

Best wishes


Mark.

[Bubblesofearth]

Thanks for sharing.

I checked my own accumulation unit data and I was down about 1.5 percent on an all-equity portfolio since 10 January 2022. Pointless to compare, perhaps, but it warmed my cockles!

Mark.

Thank goodness for Les!

[tjh290633]

I checked my own accumulation unit data and I was down about 1.5 percent on an all-equity portfolio since 10 January 2022. Pointless to compare, perhaps, but it warmed my cockles!

Just checked mine, down -0.25% since Dec 31st (FTSE100 -0.67% but FTSE350HY is up +5.64%).

TJH