What data is included in the ARC Private Client Indices?

Only actual, net of fees, performance data goes into the PCI, no model or synthetic figures are accepted for inclusion.

Data hierarchy

ARC applies a hierarchy of data inputs into the PCI index calculation:

• Individual Portfolios ARC requires all Data Contributors who offer individual client portfolios to provide monthly performance of individual portfolios, net of fees.

Additionally, ARC may at its discretion include composite data where it is satisfied that the Data Contributor is unable to provide individual portfolio data and that the quality of the indices is enhanced by its inclusion:

• Audited Composite Those investment managers who have audited composite data (such as those applying the GIPS reporting standard) may supply the audited performance data for each of their performance categories.
• Fund Performance Data Investment managers that offer a unitised version of their discretionary private client investment solutions may choose to supply performance data for these funds as a proxy for that being delivered by their discretionary private client business as a whole.

Fee Treatment

The PCI reflect real private client returns, meaning they are net of key fees, including:

• Investment management fees
• Custody/platform fees
• Underlying fund costs
• FX and execution fees

However:

• IFA fees are excluded unless mandatory for accessing the investment service.
• Some managers cannot exclude IFA fees, so either:
  • Accept a reduction in performance figures, or
  • ARC applies a standardised fee deflator.

This approach ensures fairness across different business models.

Data validation

For those participating investment managers providing actual portfolio performance information (the preferred type of submission) the following guidelines are used:

• Discretionary mandates only
• Portfolios should be larger than £250,000 (or currency equivalent)
• Performance numbers are to be given net of all fees and charges
• Monthly performance numbers should be provided wherever possible
• Heavily constrained portfolios may be excluded
• Data Contributors should provide at least 20 portfolios per PCI risk category

Consistency of portfolio submission by each Data Contributor is carefully monitored by ARC to minimise the potential impact of survivorship bias.

Data integrity

ARC understands that maintaining data integrity is essential for the PCI indices to be recognised as reliable performance benchmarks. Therefore, we approach the data verification process with the utmost diligence.

Every quarter, we require Data Contributors to confirm the accuracy of their data submissions, followed by a series of thorough validation checks to ensure compliance with our standards.

ARC reserves the right to exclude any data that it has reason to believe does not meet the required standard.

Monthly performance data, net of fees is collected from participating investment managers on a quarterly basis. Managers are asked to provide actual performance numbers for all their materially unconstrained discretionary private client portfolios.

Only actual performance data goes into the PCI, no model or synthetic figures are accepted for inclusion.

Data sufficiency

ARC carefully monitors the breadth and depth of data submissions to ensure that the PCI remain representative of the range of outcomes available to private clients for a given risk category and currency.

Where the number of data contributors in a particular index is judged to be insufficient to be considered representative, ARC may at its discretion identify and include performance data for third party composites (Composite Contributors). Only actual performance (net of fees) of funds or audited composites will be included.

Don't the Data Contributors just send you their best portfolios?

No, Data Contributors are not permitted to selectively submit only their best-performing portfolios.

Legal reasons

All PCI managers are committed, as outlined in the PCI agreement, to make every effort to ensure that the data they provide accurately represents the investment performance of their typical discretionary private clients.

They are also obligated to refrain from manipulating their submissions in any way that could misrepresent their performance averages, whether by inflating or deflating the figures.

Given the reputation and regulatory oversight of all contributors, any intentional violation of this legal commitment would have serious consequences.

Data quality control

We have a dedicated team of skilled analysts and developers focused on data processing and report generation. Each quarter, we meticulously review all manager data to identify any portfolios that may have "disappeared" and we investigate any unusual results in collaboration with the respective manager. As stipulated in the PCI agreement, we reserve the right to exclude data from the PCI calculation if we do not receive adequate information regarding a specific submission. Additionally, we request that contributors confirm quarterly that their figures are net of fees, meet the required minimum thresholds and provide insight into the percentage of assets under management (AUM) represented in their submissions.

When a new manager joins the PCI, we conduct a thorough verification of their data against third-party sources, including monitored portfolios, funds, models and published composites. We often overlay model data in scatter plots to reveal any potential data manipulation. In instances where a manager cannot provide complete data—perhaps due to system constraints or the impracticality of handling a large number of accounts (e.g., exceeding 10,000)—we take appropriate measures to ensure that we have confidence in the nature of the firm's submission and perform checks to verify that the dataset accurately reflects their performance.

Outputs

We do not publish a ranking of managers and there is minimal incentive for any manager to misrepresent their performance data.

If a manager were to inflate their figures, existing clients would likely pick up on the discrepancy between their performance and that claimed by the manager leading to awkward conversations and potential involvement of regulatory bodies.