Academic Studies of Asset Management Trends
The Wharton Global Family Alliance whitepaper was released in 2008 to study the investment strategies of single family offices in the United States and in Europe. The research was segregated into sub-groups representing those with less than $1 billion in assets and those with assets above $1 billion. The study found that U.S. families reported a more aggressive attitude toward investment objectives than their counterparts in Europe. One recommendation of the WGFA study advised the advisors and family offices serving this niche to avoid complexity in the structure of portfolios.
The authors cite that the more complex the portfolio and number of holdings, the more difficult the job of performing adequate governance, reporting, and education. The Institute for Private Investors, a peer networking organization for wealthy families and their advisors, suggested a similar theme to its membership in 2008 with a conference themed, "The Return to Simplicity". Kotak Wealth Management and CRISIL Research, published a report on the Ultra High Net Worth Individuals in India titled "Top of the Pyramid Report". Author and portfolio manager Niall Gannon suggested in Investing Strategies for the High Net Worth Investor: Maximize Returns on Taxable Portfolios that asset management for the ultra high net worth individual must be approached from a perspective which acknowledges the role of taxes in reducing portfolio returns. His research studied the S&P 500 index on an after-tax basis and found the return to be 6.63% after paying taxes at the top prevailing federal tax rate and a constant average of 6% for state taxes.
The study covered the period from January 1, 1957- December 31, 2010. Additional results from Gannon's research found that a portfolio of municipal bonds out-performed the re-invested S&P 500 index in 17% of the rolling 20 year periods since the inception of the index. Gannon rejects the use of historical returns for future asset allocation modeling for high net worth investors. He argues that an observation of stock portfolio earnings yields (the inverse of the p/e ratio) are more indicative of the future return potential of the portfolio when modeled with the impact of taxation on performance.
Read more about this topic: High-net-worth Individual
Famous quotes containing the words academic, studies, asset, management and/or trends:
“Short of a wholesale reform of college athletics—a complete breakdown of the whole system that is now focused on money and power—the women’s programs are just as doomed as the men’s are to move further and further away from the academic mission of their colleges.... We have to decide if that’s the kind of success for women’s sports that we want.”
—Christine H. B. Grant, U.S. university athletic director. As quoted in the Chronicle of Higher Education, p. A42 (May 12, 1993)
“What an admirable training is science for the more active warfare of life! Indeed, the unchallenged bravery which these studies imply, is far more impressive than the trumpeted valor of the warrior.”
—Henry David Thoreau (1817–1862)
“Imagination is a valuable asset in business and she has a sister, Understanding, who also serves. Together they make a splendid team and business problems dissolve and the impossible is accomplished by their ministrations.... Imagination concerning the world’s wants and the individual’s needs should be the Alpha and Omega of self-education.”
—Alice Foote MacDougall (1867–1945)
“The Management Area of Cherokee
National Forest, interested in fish,
Has mapped Tellico and Bald Rivers
And North River, with the tributaries
Brookshire Branch and Sugar Cove Creed:
A fishy map for facile fishery....”
—Allen Tate (1899–1979)
“Thanks to recent trends in the theory of knowledge, history is now better aware of its own worth and unassailability than it formerly was. It is precisely in its inexact character, in the fact that it can never be normative and does not have to be, that its security lies.”
—Johan Huizinga (1872–1945)