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Banking

Private Banking: Performance measures shake up high net-worth

A new index should provide greater transparency to investors

Low-risk European returns
12-month ending

The performance of portfolios of high-net-worth individuals is now under greater scrutiny than ever before. ABN Amro has launched a series of indices which show the performance of low-risk, medium risk and high-risk portfolios of private banks, creating a benchmark for high-net-worth individuals. Ariel Salama, head of private banks coverage in ABN's wholesale clients division came up with the idea. "Now a private client can compare the performance of his portfolio against those of his peers and see how he should have done," says Salama.

And it is performance that counts, he believes. "Confidentiality and tax expertise are still important, but the new generation of high-net-worth clients are more comfortable with transparency and paying tax, so instead are looking for performance."

The indices show, for example, that a low-risk European investor should have seen his portfolio return just under 5% over the 12-month period ending March 2005 – where 50% of managers produced returns. The index shows, however, that some managers produced returns as low as 2% but as high as 7.5%.

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