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HSBC Private Bank - Growth

Profile assumed:

UK resident and domiciled

Seeking a capital preservation strategy for $20m

If one considers a long enough period, studies show that equities consistently outperform all other asset classes. Indeed the 2004 CSFB Equity Gilt Study shows that £100 invested in equities in 1869 would now be worth £14.9m in nominal terms. Adjusted for inflation it would be worth a still impressive £332k. By comparison £100 invested in gilts or cash would each have been worth about £45k nominal and only just over £1,000 inflation adjusted. This would appear to make a heavy preponderance of equities in a portfolio a key component if seeking growth over the long term.

The picture over a shorter period can look very different. The same study shows that over the ten years 1993 ? 2003, returns on equities and on cash were almost the same with cash at 5.7% and equities at 5.9% nominal, or a little over 3% in real terms. The reasons will be well known to any market-watcher. After a strong run in the latter part of the 1990s, fuelled by the tech/internet stock boom, the FTSE 100 fell from a high of just shy of 7,000 at the end of 1999 to below 3,300 by March 2003.

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