Market Snapshot
Why We Quote the ARC Benchmark
To help put your portfolio’s performance into proper context, we compare it with the ARC Private Client Index. Unlike a stock-market index such as the MSCI World, ARC measures the actual, net-of-fee returns achieved by professional wealth managers across diversified portfolios containing investments such as equities, bonds, cash, structured products and alternatives. Portfolios are grouped according to their level of investment risk, allowing us to compare your results with portfolios managed to a broadly similar risk profile. We therefore believe ARC provides a fairer and more meaningful measure of how your overall portfolio has performed relative to both the level of risk taken and the wider wealth-management industry.
Are ARC Benchmarks independent?
ARC figures are independent of PWM Wealth and any individual investment manager. The benchmark is compiled by S&P Dow Jones Indices using actual performance data submitted by a broad group of participating wealth managers. The important distinction is that the underlying returns come from the participating managers, but they are independently checked, grouped by risk level and aggregated to produce the ARC benchmark. No single manager determines the result. The dataset currently represents approximately 500,000 portfolios across more than 140 wealth managers.
ARC USD Equity Risk PCI - Dec 03
+5.1%
Year to date
ARC USD Balanced Asset PCI
+3.5%
Year to date
ARC USD Cautious PCI - Dec 03
+2.2%
Year to date
ARC US Dollar Private Client Index performance estimates for Q2 2026. Movements shown are year to date.
Market Review
Energy volatility returns as Middle East conflict re-escalates
Oil markets swung sharply higher this week as the conflict between the US and Iran continued to intensify. Brent crude moved above US$100 for the first time since May, gaining approximately 7% in a single session. The escalation was marked: the US launched a 13th straight day of strikes on Iran, with both sides ruling out near-term talks, while tanker flows through the Strait of Hormuz effectively stalled amid heightened security risks.
Iran reportedly asked the Houthis – an Iran-backed armed group that controls much of northern Yemen – to stand ready to close the Red Sea route if the US strikes Iranian power infrastructure. This raised the prospect of both of the region’s key export routes being disrupted at once.
Prices eased somewhat on Friday as Houthi-related tanker attacks calmed, but the risk premium embedded in oil remains substantial. The path from here depends heavily on whether diplomacy or further escalation wins out.
Central banks: a hold from the ECB, a hawkish tilt at the Fed
The ECB kept rates unchanged at its meeting on 23 July, with the deposit rate – the interest rate paid on money banks hold with the central bank – remaining at 2.25%. The hold was widely expected, but the tone from Frankfurt was firm. With oil back above US$95 a barrel, Christine Lagarde framed the pause as tactical rather than an end to tightening.
July is a non-projection meeting, so the bar for a fresh move was always higher. The more consequential decision is likely to come in September, once new forecasts are available. The Fed and BoE both announce decisions next week – the Fed on 29 July and the BoE on 30 July.
Fed Chair Kevin Warsh has used his first appearances before Congress to draw a clear contrast with his predecessor. He told committee members that the Fed has no tolerance for persistently elevated inflation and remains resolutely committed to restoring price stability. Coming as energy prices are pushing price pressures higher again, this suggests markets may have priced in more tolerance for an AI-capex-driven inflation impulse than the new Fed leadership is willing to accept.
Tariffs: the legal basis shifts, but effective rates hold steady
A new set of US tariffs took effect on 24 July. The temporary 10% Section 122 global surcharge, designed to address trade imbalances, expired as a new Section 301 action targeting unfair trade practices and tied to forced-labour enforcement came into force across 60 economies, including the UK and EU.
For most countries, the new rate simply mirrors the outgoing rate, so effective tariff burdens are largely unchanged. The US is increasingly relying on Section 301 as its durable legal vehicle for tariff policy following successive court challenges to the executive’s use of emergency powers.
Regional equity allocations – concentrated exposure and the search for genuine diversification
The Korean equity market has become the clearest illustration yet of how concentrated the artificial intelligence (AI) theme has become within supposedly diversified regional and emerging-market exposure. Return volatility on Korean equities exceeded 60% as of 20 July, nearly twice the level on Japanese equities and higher than Bitcoin’s volatility over the same period.
The Korea Exchange activated circuit breakers seven times through mid-July, compared with none in 2025. Samsung Electronics and SK Hynix saw their combined weighting rise above 50% ahead of the recent pullback, meaning investors buying broad Korean market funds gained highly concentrated exposure to two semiconductor companies and the global AI investment cycle rather than a diversified domestic equity market.
The index has fallen around 25% since its June peak, representing a roughly US$1 trillion decline in market value, with the two chipmakers each losing at least 30% after a rally that had seen the index nearly double earlier in the year.
The same pattern appears, in milder form, across the standard emerging-markets benchmark. The top ten constituents of the MSCI Emerging Markets Index make up 40% of the index, with TSMC and Samsung Electronics alone accounting for nearly a quarter. By contrast, no single country accounts for more than 10% of the MSCI Frontier & Emerging Markets Select Index and technology exposure is only 1%, with returns driven more by domestic consumption and financial services.
There is also a valuation angle. Some genuinely under-exposed emerging markets are increasingly being viewed as diversifiers rather than laggards. Markets such as the Philippines, Kenya and India offer growth drivers that are less closely tied to the AI narrative, but investors must select them deliberately. Broad index-tracking exposure to emerging markets increasingly amounts to a concentrated bet on a small number of Asian chipmakers.
PWM View
The sharp rise in oil prices has increased near-term inflation risk and makes the policy outlook more difficult for central banks. Even if rates remain unchanged this month, a more cautious and hawkish tone from the Fed and Bank of England would be understandable while the energy shock remains unresolved.
Within equity markets, the recent volatility in Korean and broader emerging-market indices is a useful reminder that index labels can disguise significant concentration risk. Exposure that appears diversified at a regional level may in practice be dominated by a small number of semiconductor companies and the global AI investment cycle.
We continue to favour broad diversification across regions, sectors and asset classes, with careful attention to the underlying holdings inside passive funds. Select exposure to domestic-growth markets, financials, infrastructure and other less AI-dependent areas can improve portfolio balance without abandoning long-term technology themes.
Volatility is likely to remain elevated while markets assess the conflict, central-bank responses and major technology earnings. However, strong corporate balance sheets and continued economic growth remain supportive. We therefore believe investors should remain invested, maintain appropriate liquidity and use periods of weakness to rebalance selectively into high-quality assets.
