ARC fills a ‘void’ with private client indices
Private client investors in Canada have a new tool at their disposal that allows them to track their performance versus peers, including those with similar risk appetites.
Independent investment consultancy Asset Risk Consultants (ARC) has launched four private client indices that use anonymous and confidential data from more than 20 contributing investment managers.
They include Coleford Investment Management, Delaney Capital Management, Gluskin Sheff, Evans Investment Counsel, Guardian Capital Advisors and Leith Wheeler Investment Counsel.
“ARC has had success in the U.K., but it’s very early days in Canada,” said Jonathon Palfrey, senior vicepresident and portfolio manager at Leith Wheeler. “In retail, you have Morningstar and other kinds of data, and on the institutional side you have Mercer and RBC, but the private client area in the middle is a bit of a void.”
There are a lot of data providers that compare fund managers and provide peer group analysis. But ARC differentiates itself by focusing on private clients, with a twist that divides investors into risk buckets. The lowest risk level for the four Canadian Dollar denominated Private Client Indices (CAD PCI) are ARC Cautious, which is for portfolios that have up to 0.4 times the relative risk of equity markets, and typical equity content of up to 35 per cent. The other categories are ARC Balance Asset, ARC Steady Growth, and ARC Equity Risk, which is characterized by above 0.8 times equity market risk and higher than 75 per cent typical equity content.
Clients are put into one of those four indices, and their performance will be compared to other investors with similar risk characteristics.
“What users like about PCI is that these indices are based on the actual returns net of fees that investment managers are delivering to private clients,” said Graham Harrison, ARC Group managing director.
The launch comes as 2016 was the first year when all private clients received letters from investment managers setting out the money-weighted returns for their portfolios.
“We think it’s useful information to have as a firm — to know how we stack up against other investment professionals,” said Bob Hill, managing director at Coleford Investment Management, a Toronto-based investment firm.
The private client business is a growth area in Canada, as elsewhere, largely because of retiring baby boomers.