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
+6.2%
Year to date
ARC USD Balanced Asset PCI
+4.3%
Year to date
ARC USD Cautious PCI - Dec 03
+2.0%
Year to date
ARC US Dollar Private Client Index performance estimates for Q3 2026. Movements shown are year to date.
Market Review
The departure lounge: UK plc
UK mid- and small-cap stocks were among the stronger areas of global equity markets last week, gaining 2.4% compared with a 0.5% rise for UK large caps. A combination of increased M&A activity, encouraging corporate earnings and stronger domestic economic data attracted investors towards the relatively inexpensive smaller end of the UK market.
M&A has been particularly important. More than US$60 billion of UK takeover activity has been announced during 2026, with foreign and private-equity buyers continuing to take advantage of valuations that remain significantly below those of many international markets. Takeover volumes are now running approximately 250% above prior-year levels.
Overseas buyers have been particularly active, including US private equity firms, European companies and Asian corporates. According to the ONS, the number of UK companies under foreign ownership has increased by 35% since 2020, with approximately 6.6 million people now employed by foreign-owned businesses.
The valuation discount that has frustrated UK investors for several years is therefore becoming an increasingly powerful attraction for international capital.
Importantly, takeover activity is not the only positive development. The half-year reporting season has been broadly constructive, particularly among domestically focused mid-cap companies. Businesses across areas including housebuilding, retail, insurance and financial services generally met or exceeded expectations, with several companies upgrading their full-year guidance.
Valuations remain supportive. UK mid- and small-cap equities currently trade at approximately 11.6 times one-year forward earnings, compared with around 18.6 times for global equities. This substantial discount provides investors with a potentially attractive entry point if corporate earnings and economic conditions continue to improve.
Economic data has also become more encouraging. The UK Services PMI rebounded to 52.1 in July from 48.8 in June, returning to expansionary territory. Taken together, improving economic activity, resilient corporate earnings and continued takeover interest suggest that parts of the UK market may be in considerably better shape than current valuations imply.
Global economic data remains supportive
The broader global economic backdrop also remains constructive, with the United States continuing to lead growth among major developed economies.
US ISM Manufacturing increased to 55.6 in July, its highest level since May 2022 and its seventh consecutive month in expansionary territory. The Global Composite PMI also strengthened to 52.6, its highest reading since February.
Consumer spending, corporate profitability and economic activity remain supportive of continued expansion, meaning that global recession risks still appear relatively low.
China remains the main exception. Its Composite PMI declined from 53.6 to 50.8, highlighting the persistent challenges facing an economy that has struggled to generate stronger growth momentum for several years.
The US labour market also deserves closer attention. July nonfarm payrolls disappointed, with employers shedding 23,000 jobs compared with expectations for an 83,000 increase. Previous months were also revised lower by a combined 103,000 jobs.
However, unemployment declined to 4.1%, and some of the payroll weakness reflected temporary factors and government job reductions. At present, the data therefore appear more consistent with a gradual cooling in employment conditions than a significant deterioration in the US economy.
Risks remain, but the underlying backdrop is resilient
Several risks continue to warrant attention. The situation surrounding the Strait of Hormuz remains unresolved. Negotiations between Iran and Oman appear to be progressing, although important issues, including sanctions relief, remain outstanding.
Strategic petroleum reserve releases have helped limit the impact of higher energy prices, but these reserves are finite. A prolonged disruption could therefore tighten global energy markets, particularly as the Northern Hemisphere approaches winter.
The AI investment cycle also remains under scrutiny. Capital expenditure by the major hyperscalers remains exceptionally high, and investors increasingly want evidence that this spending will translate into sustainable revenues and attractive long-term returns. AI-related shares recovered last week but remained volatile, particularly among Asian memory-chip companies.
Finally, resilient economic growth combined with persistent inflationary pressures could encourage a more hawkish stance from the Federal Reserve. With no Fed meeting scheduled for August, attention will increasingly turn towards the Jackson Hole symposium for further indications of the direction of monetary policy.
PWM View
We remain positive on the broader outlook for global investment markets over the remainder of the year. Economic growth continues across the major developed economies, corporate profitability remains supportive and inflation appears to be moving gradually in the right direction. While periods of volatility should be expected, particularly around geopolitical developments and changes in interest-rate expectations, the underlying environment remains supportive of long-term investors.
Importantly, opportunities are becoming increasingly broad. The recent improvement in UK equities provides a good example of how markets that have been overlooked for extended periods can begin to benefit when valuations, economic conditions and investor sentiment align. Similar opportunities can emerge across different countries and asset classes as the investment cycle develops.
This reinforces why diversification remains central to our investment approach. It is extremely difficult to predict which country, asset class or investment style will lead markets from one period to the next. A well-diversified portfolio allows investors to participate in areas that are performing strongly while reducing dependence on any single market, theme or economic outcome.
Periods of weaker markets are an unavoidable part of long-term investing, just as periods of strong performance are. Diversification cannot eliminate volatility, but it can help portfolios navigate both positive and negative investment cycles without requiring investors to continually predict the next market leader.
For the remainder of the year, we therefore believe investors should remain focused on their long-term objectives rather than short-term market fluctuations. With economic growth remaining positive, corporate earnings resilient and valuations attractive in several parts of the global market, we see good reason to remain invested. A disciplined and appropriately diversified portfolio should continue to provide investors with a strong foundation for participating in global growth while managing the inevitable periods of uncertainty along the way.
