The latest figures from Performance Watcher reveal a clear trend: larger discretionary mandates achieve higher returns with lower risk.

The analysis examined portfolios classified within the Performance Watcher Indexes with medium risk (PW-Mid Risk) in the reference currencies francs, euros, and US dollars.

These investment profiles traditionally consist of approximately 50 percent bonds and 50 percent equities, aligning with the risk profiles preferred by clients in the Swiss wealth management sector.

Higher Returns for Portfolios Above 5 Million

This dataset, comprising over 1,000 portfolios in Swiss francs and euros and 700 accounts in US dollars, allows for well-founded comparisons.

The 2024 figures show that while the PW-Index – CHF Mid Risk recorded a return of 6,42 percent with a risk level of 5,57 percent, the PW-Index – CHF Mid Risk (>5 million francs) achieved 7,46 percent return with only 5.04 percent risk.

A similar pattern emerges in euros and dollars. Over a ten-year period, the trend remains consistent: larger mandates consistently deliver better results with lower risk.

Why Size Matters

According to Performance Watcher, large mandates benefit from several key advantages: Economies of scale reduce costs, from lower fees to better exchange rates.
Greater diversification, enabled by portfolio size, provides access to exclusive asset classes such as private equity and hedge funds.

The Limits of Asset Allocation

The traditional categorization based on asset allocation is intended to make investment risk more understandable for investors, but it falls short. Despite standardized classifications used by wealth managers, data from Performance Watcher—covering 18,000 portfolios—reveals significant differences in actual risk structures.

For portfolios with a «medium risk» profile in euros, the PW Index achieved a 2024 return of 7.94% with a risk level of 5.3%. However, the top professionally managed portfolios delivered returns between 15.81% and 17.44%, while risk levels varied between 5.95% and 10.66%.

The key factor lies in portfolio composition. The fixed-income allocation may consist of either safe government bonds or riskier corporate bonds. Similarly, the equity portion may focus on stable blue-chip stocks or more volatile tech names.

Swiss Banks and the Competition

A comparison of the CHF and USD Mid-Risk Performance Watcher Index for banks with the overall PW Index shows:

In the CHF Mid Risk segment, their core market, banks outperformed the overall market in terms of performance and risk in 2024 and over a five-year period. In contrast, in the USD Mid Risk segment, banks lag behind. According to Performance Watcher, this suggests that banks are well-structured and strong in the CHF segment, while external wealth managers with a US focus may have greater expertise in the USD segment, outperforming Swiss financial institutions.

However, the PW Bank Index is statistically not yet significant due to the limited data set, and should therefore be interpreted with caution.