Report highlights gap between HNWs' investment performance perception and reality

High net worth (HNW) investors are confident their portfolio delivered strong returns last year, according to analysis from Y TREE, despite the majority of wealth managers ‘underperforming’ the firm’s benchmark.

Its Plugged into Wealth Management 2026 report showed that 96 per cent of HNW investors were confident their portfolio had performed well in 2025.

However, the wealth data analytics firm found that 84 per cent of wealth managers had underperformed the Y TREE investible risk-equivalent benchmark.

Y TREE analysed over 550 portfolios across 110 providers, measuring each portfolio against its benchmark, which it described as the return an investor would have achieved, net of fees, by taking the same level of risk through a cost-efficient, globally diversified portfolio of equities, bonds, and commodities, currency-hedged into the portfolio’s base currency.

The average wealth manager included in the study underperformed the benchmark by 4.3 per cent in 2025.

This was an improvement from the average underperformance of 6.2 per cent in 2023, but worse than the 4.1 per cent average in 2024.

While 84 per cent of wealth managers underperformed against the benchmark last year, this was down from 92 per cent in 2023 and 88 per cent in 2024.

Its survey of 250 HNW investors showed that 96 per cent were confident their investments had performed well last year, including 59 per cent saying they were very confident.

More than half (58 per cent) believed their portfolio had performed on par with the market, while 36 per cent felt it had outperformed the market.

“This demonstrates a powerful disconnect between perception and the reality of a data-led analytical assessment of performance,” Y TREE stated.

“This disconnect is not necessarily the result of complacency. It reflects the way performance is typically reported.

“Investors are often shown absolute returns or comparisons to broad market indices, rather than a risk-matched, net-of-fees benchmark that reflects the true exposure of their portfolio.”

Nearly a quarter (22 per cent) of HNW investors said they judged whether their portfolio had performed well based on what their adviser told them, while 20 per cent judged performance against inflation.

Meanwhile, a quarter (25 per cent) had never changed their wealth manager in the past five years, which Y TREE said suggested misplaced loyalty.

“It is not that investors aren’t savvy or that they are misinformed,” the report said.

“Without the right analysis and tools, strong absolute returns can create the illusion of value added, even when relative performance falls short.

“2025 offered a blunt reminder: you can’t control the markets, but you can control who manages your wealth.

“For many investors, the cost of loyalty to an underperforming manager is measured not in basis points but in additional years of working life.”

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