Designed to be used by private clients and their advisers, the indices - which are based on actual performance numbers â acts as a benchmark against which the performance of discretionary portfolios with a non-specialist mandate can be compared. Portfolios are assessed against a meaningful and sizeable peer group and unlike an index based benchmark can include a wide range of assets such as hedge funds, property, commodities and structured products. The aim is to provide a measure of actual returns that managers are achieving for a given level of realised risk.
David Bulteel, Executive Director Rensburg Sheppards plc says:
âItâs crucial to ensure that we have an objective system for verifying that our portfolios match the risk/return parameters agreed with our clients. The ARC indices will measure actual portfolio returns rather than index returns based on a predetermined asset allocation. This allows investment performance to be put into the only context that matters for our clients â how much risk was taken to achieve the return?â
There are now 24 contributing investment managers who submit data to ARC. Pre-set asset allocations, asset class restrictions, concentration limits and index performances are excluded from the indices which are based on the performance numbers provided by the participating investment managers.
Chris Hills, Chief Investment Officer at Rensburg Sheppards Investment Management comments:
âInvestors and their advisers deserve empirical data to enable them to objectively review their managerâs results. The existing asset allocation based measures of private client performance have laboured to retain a meaningful interpretation of what can be achieved in portfolios as investment managers adopt a wider range of asset classes and strategies. By stripping away the industryâs sometimes confusing terminology and focussing purely on realised risk and actual portfolio returns, these indices allow genuine like for like comparisons to be made.â
Initially Rensburg Sheppards will pilot the service with their international sterling based portfolios with the aim of rolling it out to other portfolios over the next 12 months.