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Wealth management review

Bet on contrarian funds, not the top performers; Asian banks hunting for talent in Europe; Wealth management a drag on Australian banks.

In case you missed it, a summary of noteworthy wealth management articles from around the web:

Hard data shows top performing funds aren’t the best bets

Invest in the contrarian funds, not the performance leaders, according to an article in Business Insider.

S&P looked at 682 domestic US equity funds that were in the top quartile in March 2013.

By March 2015, about 5% of those funds remained top quartile, according to Aye Soe, senior director of index research and design at S&P Dow Jones Indices.

The research firm also extended the analysis backward to begin at March 2011 and found no large-cap, mid-cap, or small-cap funds remained in the top quartile by March 2015.

“This figure paints a negative picture regarding the lack of long-term persistence in mutual fund returns.”

Investing in contrarian strategies seems to be a more successful strategy than betting on top performers.

“The data show a stronger likelihood for the best-performing funds to become the worst- performing funds than vice versa,” Soe said.

“Out of the 427 funds that were in the bottom quartile, 15.93% moved to the top quartile over the five-year horizon, while out of the 427 funds that were in the top quartile, 21.78% moved into the bottom quartile during the same period.”

Wealth management talent hunt

Specialist wealth managers are coming to global business school INSEAD to recruit wealth management talent for mainland China, Hong Kong and Singapore, according to BusinessBecause.

Private banks are also increasingly hiring more talent for wealth management. “Nowhere is this trend more prevalent than in Asia, as local wealth managers multiply and merge, and global banks seek to capitalize on the spread of wealth into emerging markets.”

A regulatory clampdown on wealth managers means banks are seeking more regulatory knowledge in new recruits.

Meanwhile, Citigroup intends to double the number of wealth-management clients in Asia over the next five years to 1 million, reports the Wall Street Journal.

Citibank is targeting two segments – clients with assets for investments in the range of $100,000 and $1 million and clients with assets between $1 million $10 million. The potential markets include Singapore, Hong Kong, Taiwan, India, China and South Korea.

The middle class in Asia will grow disproportionately to the rest of the world, said Jonathan Larsen, the bank’s global head of retail banking and head of consumer banking for Asia Pacific.

Wealth management a drag on Australian banks

In Australia, banks’ wealth management divisions “are a drag on group return-on-equity”, reports The Australian.

Big banks like ANZ and NAB are “are currently earning below the cost of capital across their operations” and are likely to be sellers of big stakes in their wealth management divisions.

Big offshore funds as the most likely joint venture partners.


Part of the Mark Allen Group.