Credit Suisse Private Banking is the winner

The Swiss giant wins our Model Portfolio Game with a return of 34%.

In the first such game organized in Asia, Credit Suisse Private Banking has proved its top rank as an investment advisor by winning our Model Portfolio Game.

The game was launched in October 15, 2002 and was designed to road test just how good private banks are at managing clients' money. The real-time game gave each bank $5 million to invest for a hypothetical client who had a balanced risk profile.The client was looking for a return of at least 5% per year and the banks were allowed to trade the portfolio once per quarter. The game was concluded with the publication of the Summer issue of Asian Private Capital, the seasonal supplement to FinanceAsia magazine that targets its high net worth readership. Readers of Asian Private Capital have been able to follow the performance of the portfolios since the game began.

Credit Suisse's performance was superior to the three other competing private banks. Since October 2002, its portfolio rose 34.03%, adding $1.7 million of value to the portfolio. The second best performance was 21.3%.

The portfolios were independently valued and audited by another private bank, and all securities purchased for the portfolio had to be publicly traded.

In an industry that lacks any public data, this was the first time private banks in Asia had volunteered to put their investment performance to a very public test. All the private banks put in performances that merited clients trusting them with their funds, but Credit Suisse delivered a superior performance.

Portfolio Game - Performance Summary

  Static portfolio CSPB ABN AMRO Dresdner

3Q 2002





4Q 2002





1Q 2003





2Q 2003





3Q 2003





4Q 2003





1Q 2004





Although no money was actually invested, the game simulated a real portfolio, with the banks buying real stocks, bonds and even hedge funds. Moreover it was played during some of the toughest, most volatile conditions a private bank could face. These portfolios had to survive SARS and the Iraq war, among other things.

Commenting on its winning strategy Credit Suisse Private Banking notes: "Although this Model Portfolio Game was meant to be a competition we preferred not to look at it as such, but our philosophy was more to actually implement our investment strategy and asset allocation, as for a client. We were therefore very focused on capital preservation and appreciation, and therefore invested the assets conservatively.

"At the beginning of the investment period in October 2002 we did not expect strong drivers for equity markets but were favourable towards fixed income investments and real assets and commodities such as oil and gold. Our investment approach on the equity side was value-oriented favouring high dividend-yielding stocks. We had positioned our equity portfolio in Hong Kong stocks early on namely in property stocks, as we saw them trading at very compelling valuations. This was a move that proved to be perfectly timed, as Hong Kong property entered a strong rally in the third quarter of 2003.

"Our investment decisions in April 2003 were very much influenced by the conflict in Iraq. Then in October last year, backed by a progressing US economy and finally improving employment figures, we significantly increased our allocation to equities to 42% from 30%. To finance this we took profit on bonds, reducing their portion of the portfolio to 40% from 51%. Most of the proceeds were invested in Asian equities. We also increased our exposure to gold, buying a gold mining fund.

"Then in early 2004 we locked in some of our equity gains, reducing our global equity weightings from 44% to 26% and upping our holding of hedge funds to 20% and bonds to 54%. Looking back, it was an interesting period, with a lot of uncertainties in the equity and bond markets. We took a defensive approach, emphasising cashflow in terms of dividends and coupons, and valuation. It was also thanks to our good stock picking and dynamic asset allocation that we ended the game ahead of our competitors."

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