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ABN Amro: revealing all

15th February 2005
By BBR Staff Writer

ABN Amro is launching an index to benchmark private banking performance.

ABN Amro [AAB.AS] is set to launch an index aimed at showing wealthy investors how their investments should be performing, throwing open the traditionally clandestine wealth management sector to deeper scrutiny. Absolute returns are now the key for HNW clients, and the index could be a concern for those private banks failing to provide them.

'Content According to a report in the Financial Times, the Amsterdam based financial group is set to launch a new index tracking investment performance in the private banking industry. The index, due to be published from the end of the first quarter of 2005, is intended to act as a guideline for wealthy clients to show how their investments should be performing.

Updated monthly, the index will measure the performance of a typical portfolio consisting of equities, bonds, property and alternative investments. ABN Amro will publish a range of returns that should have been achieved over the course of the year based upon location, risk profile and currency.

The index will not take into account the amount of money wealthy clients have invested, although according to the bank, it is likely to be most relevant for investors with assets worth between $5 million and $10 million.

In launching the index, ABN Amro has recognized a changing dynamic within wealth management. Following years of significant losses, clients are now demanding far greater transparency regarding their investments and their wealth management relationship. Although the needs and investment preferences of high net worth investors are extremely diverse, this index will at least provide clients with a much needed guideline for acceptable investment performance.

Indeed, the new index could be a real asset for those fund managers that are performing strongly at any given time, and doubtless it will be used as a means of attracting considerable new business. Yet there is a risk it will be a double edged sword: high net worth clients are increasingly seeing an absolute return as the key benchmark of investment performance of fund performance - merely out performing the competition is no longer viewed as satisfactory. ABN Amro's tracker gives clients a further tool with which to gauge the performance that they should be enjoying: those fund mangers that do not measure up may find themselves contemplating the loss of valuable patronage.
'End Intelliext

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