With the recent changes in the transfer tax laws, it is possible to transfer greater wealth and reduce income taxes through POAST. This innovative approach and integrated trust technique allow a wealthy individual (the donor) to provide benefits to both parents and descendants. A properly structured POAST can accomplish multiple objectives, including support for less wealthy family members, income tax mitigation, and enhanced dynastic wealth transfer.
Resource Search
Change is in the wind. After a challenging 2015, the investment landscape for 2016 will be defined by a new course for monetary policy and political leadership, a new primary catalyst for stocks and an altered roadmap for credit markets, and for energy. Looking ahead at these asset classes—U.S. equities, international equities, fixed income, commodities, hedged strategies, and private markets—can provide a good sense of the investment outlook over the next twelve months.
Volatility in global equities subsided in the Fourth Quarter of 2015; however, 2016 will likely see multiple spikes due to the follow-through from low oil prices and concerns over China. Other current and fluctuating conditions of global capital markets add to the volatility. Amidst the turmoil, growth should stabilize in 2016 with the impact of China deceleration concerns likely to abate, Japan and Europe being on more stable footing for growth, and the CapEx revival in Europe.
For most financial assets 2015 was a challenging environment, with equities seeing negative or muted performance and fixed income facing its worst year since 2013 as yields slowly moved higher in anticipation of the Fed rate hike in December. Some of the macro themes of 2015 (a strong dollar and monetary tightening in the U.S.) will carry forward into 2016, but some will change and new themes will develop in the global economy. The outlook provides significant investment opportunities while recognizing the current risks and volatility of the market environment.
Important insights lie in the trends hidden under asset class classification of the hedge fund industry, which is expected to grow 25% annually in the next five years from $0.5 to $1.4 trillion dollars. To spot the trends, the asset categories should be useful for family offices to gain meaningful insights of major allocation shifts. A good place to start is to apply the widely recognized industry categories—Equity Hedge, Event Driven, Macro, and Relative Value—to the classification methodology.
Global equity markets rebounded sharply in October 2015 after the third quarter sell-off due to accommodative monetary policies and some better economic and earnings news. The gains faded late in the quarter on further weak data from China, weak exports, and more stress in the energy and commodity sectors due to oversupply mostly extracted by new technologies. As the world economies work through various transitions and uncertainty, investors are understandably anxious about the outlook for financial markets.
Even with the most loyal employees, invested stakeholders, or intimate client relationships, it is naive to assume immunity to lawsuits—when there is perceived violations of rights, financial loss, or breach of contract, litigation often follows. It is important to be mindful of the liability risks that exist in the family office setting and prepare for potential claims.
While the public sentiment remains focused on high valuations, research shows the news cycle is focusing on hype and the fear that venture capital is in another bubble. When evaluating the health of the venture market, internal data shows that revenue multiples have been declining since 2012 for a majority of the U.S. venture-backed technology companies with revenues under $100M. The phenomenon can be attributed to young companies growing revenues earlier than before, with revenue growth rates outpacing valuation growth rates.
The venture ecosystem in Israel is undergoing an evolution as entrepreneurs are flourishing throughout the country. In November 2015 there were 6,000 start-ups in Israel garnering funding from a new generation of venture funds made up of both spin-outs from existing firms and new VCs. The combination of a vibrant culture of entrepreneurship, support of the government, strong university, multi-national corporations, and existence of venture capital and liquidity has made many bullish on Israel.
Many investors are analyzing how the recent volatility may impact both their public and private holdings. When comparing the S&P 500's performance over the past 32 years with the Cambridge Associates’ median venture capital returns over the same period, you will find an inverse correlation between the two of 28%, implying that as the public markets increase, venture returns for those vintage years decrease. Ultimately, market volatility and the correlated lowering of public valuations can create opportunities for the venture partners.