Private wealth management 'could benefit from improved risk indicators'

Private wealth management through investment might be made more secure with better risk indicators, according to industry experts.

Guidelines recently issued by the Committee of European Securities Regulators (CESR) on a standardised methodology to indicate the safety of investment funds provoked comment from the Investment Management Association (IMA), which claims more detailed information is needed if investors are to reap the most benefit.

The group argues using data from only the last five years would not give a reliable indication of risk over the long term, meaning changing market conditions might render the proposed index irrelevant.

Under the current proposals, the IMA suggests over half of UK-authorised funds would be granted the same risk rating, making private wealth management through investment difficult due to lack of differentiation in ratings.

CESR was established in 2001 to improve legislation of and coordination between securities regulators and act as an advisory body to the European Union Commission. ADNFCR-2318-ID-19873160-ADNFCR