The ARC Wealth Indices are the world’s largest dataset of private client investment performance covering more than 20 years of real-life, net of fees investor outcomes. The indices allow all investors to see what “good” really looks like. There are no pre-set asset allocations; no asset class restrictions; no concentration limits; and no index performances used. Only actual performance numbers are included in the calculation of the indices.
The indices are available free of charge to trustees and private client advisers through a web-based subscription service which can be found athttps://www.suggestus.com/.
In recent years it has become the norm for investment managers to adopt a multi-asset class approach to discretionary portfolio construction. Thus, private clients have seen their portfolios extended to incorporate not just the traditional cash, bonds and equities but also hedge funds, property, commodities, structured products, currency overlays and private equity.
Few investors wish to place all their investment assets with a single fund manager. Rather, they prefer to employ several investment managers, often with differing investment mandates and styles. This diversity, whilst delivering risk reduction, makes portfolio design and analysis more complex.
This trend has meant that the traditional index-based approach to benchmarking performance has become increasingly moribund. In response managers have tended towards absolute rather than relative return measures.
The shift to cash-plus style benchmarking has, however, left private clients and their advisors in a quandary. Given the volatility of financial markets, how can the evolution of manager performance be assessed?
The ARC Wealth Indices were designed to solve this performance measurement conundrum. They allow performance to be assessed against a realistic and sizable peer group for the first time. With over 140 investment houses contributing performance data, all the major investment styles, approaches and philosophies are represented ensuring that the ARC Wealth Indices are unique in coverage and scope.
For private clients and their professional advisers, the ARC Wealth Indices provide an objective means of placing investment performance into context. Reflecting the opportunity set afforded by today's sophisticated and ever changing financial market, the ARC Wealth Indices are a barometer for the state of the private client investment management industry.
There are four PCI categories in five currencies covering the spectrum of risk: Cautious; Balanced Asset; Steady Growth; and Equity Risk. Cautious The definition of a Cautious portfolio is one where the historical variability of returns has been less than 40% of that recorded by world equities. The dominant asset classes tend to be cash, bonds and hedge funds.
Balanced Asset Balanced Asset portfolios are those is one where the historical variability of returns has been around 50% of that recorded by world equities. Balanced asset portfolios tend to encompass the widest range of asset classes. Managers often refer to multi-asset class strategies in this risk category as being absolute return oriented. Steady Growth Portfolios falling into the Steady Growth risk category have a risk profile of between 60 - 80% of world equity markets. They usually have a significant allocation to equities but also have exposure to a range of other asset classes. Traditionally, such portfolios would have been tagged as "balanced".
Equity Risk The Equity Risk category encompasses all portfolios with a risk profile similar to that of the equity markets. Traditionally, such portfolios would have been tagged as "growth". Equities tend to be the dominant asset class.
| Category | Risk relative to equity markets |
| ARC Cautious PCI | 0-40% |
| ARC Balanced Asset PCI | 40-60% |
| ARC Steady Growth PCI | 60-80% |
| ARC Equity Risk PCI | 80-120% |
The PCI indices are intended to be used to help private clients and their professional advisers place portfolio performance into context.
Establish Portfolio Risk Profile
The first step is to establish which of the four PCI indices to use. PCI's are categorised according to risk relative to the equity markets. The portfolios investment objective should provide guidance as should the percentage of the portfolio invested in equities.
Obtain Portfolio Performance Data
This should be available from the investment manager or can be calculated from portfolio valuations and statements. Monthly or quarterly performance data is best, but semiannual or annual data can still be compared to the PCI results.
Performance Comparison
Once the portfolio performance has been established, it can be compared against the appropriate PCI index. PCI reports allow return comparisons over any desired period from their launch date of December 2003.
For ease of reference some common periods are precalculated but the monthly index data is also made available.
PCI reports also incorporate information on quartile ranges for returns and portfolio drawdowns. These ranges help place investment manager performance into context versus a realistic peer group.
ARC Research, now part of S&P Dow Jones Indices, recognises that data integrity is critical to the acceptance of the PCI indices as suitable performance yardsticks. Thus, the data verification task is taken extremely seriously. Each quarter Data Contributors are asked to sign off on their data submissions and a series of validation checks are made. In addition, all Data Contributors have contractually undertaken to ensure that data supplied by them for PCI accurately reflects the investment performance of their discretionary private client team.
ARC Research—now part of S&P Dow Jones Indices—specializes in converting investment performance and fee data into actionable intelligence, while also assessing how investment firms deliver value to clients. With over 145 contributing firms and more than 375,000 portfolios, the ARC Wealth Indices offer a real-world reflection of professionally managed wealth. ARC Research complements S&P DJI’s commitment to objective, transparent and rules-based benchmarking by expanding its capabilities into the private wealth space. Together, the firms promote greater clarity and data-driven decision-making across both the institutional and individual investment landscapes.
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