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April Headlines
Family Continuity and Governance
Industry Trends and Issues
Integrated Planning
Investment Planning
Lifestyle Management
Risk Management
Strategic Philanthropy
Taxation
Family Continuity and Governance
How to Make Family Meetings Work
Family meetings offer an open forum for sharing news, concerns, opportunities and challenges. They also provide a way to collaborate on decision-making and to educate younger family members on family finances and traditions. In this white paper, Calibre explores the reasons to hold family meetings and ways to make them work well.
Industry Trends and Issues
In the Year 2050: Beyond the BRICs
Emerging markets will continue their rapid growth through 2050, and the increasing number of strong markets will give investors choices beyond the BRIC economies of Brazil, Russia, India and China, according to updated projections from PricewaterhouseCoopers. The report predicts that China will overtake the United States as the world’s largest economy in 2025, but the fastest growth may occur in Vietnam.
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Strong Performance of Equities Unnoticed
A large percentage of private investors may be underestimating how well equities perform. A survey of private investors across the United Kingdom by Santander Asset Management UK found that 91 percent of the investors failed to identify equities as the best-performing asset class in 2007.
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Real Estate Market Off to Slow Start
Look for European real estate transaction volumes to be down 25 percent in 2008 compared with 2007, according to a European capital markets bulletin from Jones Lang LaSalle. Much of the downturn is expected during the first half of the year, due to falling values and slow investment activity. However, buyer opportunities are predicted to improve later in 2008 as prices correct across sectors and markets.
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Why Inflation Has Returned
After 10 years of global disinflation, worldwide inflationary pressures have picked up significantly since last summer. While economists debate whether this development is the fault of bad policies, bad luck or both, a new report from TCW fixes the blame on rising commodity prices. The authors further explain why inflationary pressures are likely to intensify in the years ahead.
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Integrated Planning
The Impact of Interest Rates on Wealth Transfer
Investors are well advised to take into account the interest rate environment when considering wealth transfer options. A new white paper from Fiduciary Trust points out the importance of interest rates in creating trusts, reviewing estate plans and loaning money to family members. The paper then examines three wealth transfer options that work well during periods of low interest rates.
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The Holy Grail: $100 Million in Death Benefits
Obtaining death benefit insurance at the $100 million level can be difficult due to the lack of capacity within the insurance industry. David Byers Jr. and Pat Trammell Jr. of Capital Strategies offer a workable three-step solution with each step securing a different level of the desired death benefit.
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Investment Planning
The Evolution of ETFs
Exchange-traded funds have grown in number from 80 in 2000 to nearly 700 today with holdings of about $600 billion. But as new funds have entered the market, so has the number of increasingly specialized ETFs that carry higher risk. This article from the University of Pennsylvania’s Wharton School of Business examines the issues related to indexed ETFs versus managed ETFs.
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Building Alternative Investments into Portfolios
Alternative investments are an increasingly necessary element in high-net-worth portfolios, according to a research report from Fortigent. The author, Scott Welch, builds the argument for alternative investments, analyzes the appropriate allocation and explores the challenges of implementing alternatives in different-sized portfolios.
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FIN 48 Deferred for Most Private Investments
The Federal Accounting Standards Board has deferred implementation of FIN 48 for most private investment funds until they issue 2008 financial statements. However, these funds need to work now on adopting policies and procedures to address FIN 48. This article from Rothstein Kass looks at what will be needed and offers suggestions for implementation.
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Succeeding with Active Investment Management
Independent research by Altair Advisers finds that active investment management can provide persistent outperformance and protection in down markets, compared with passive management. However, patience and thorough, ongoing qualitative due diligence are prerequisites.
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Lifestyle Management
The Family Effect of Financially Empowered Women
As their personal wealth and educational levels have increased, women have sought a more equal and active role in family governance, philanthropy, and business and financial planning. This article from RayLign explores the changes that have empowered women and how those changing roles affect family leadership, decision-making and relationships.
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Risk Management
Users Have a Role in Online Banking Security
While banks need strong online security systems, Internet users need to help in making sure online banking is secure by using anti-virus software, according to a report by Deutsche Bank. The researchers found that more than 30 percent of Internet users in Germany do not bank online because of security concerns.
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Strategic Philanthropy
Mixing Philanthropy with Asset Preservation
A health and education exclusion trust may offer a way to preserve assets for younger family members and avoid harsh generation-skipping taxes, while still contributing to charity. In this article, Mela Garber of Anchin, Block and Anchin explains how a HEET can be a useful and effective estate planning tool that benefits family and a designated charity while shielding wealth from GST and gift taxes.
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Wealth on a Philanthropic Mission
Socially responsible investing lets investors use their investment capital for advocacy – to advance a social cause or a values-driven position. In this paper, the Threshold Group defines SRI, shows how it fits into wealth management and provides points for families to consider in exploring whether to consider this approach for their investment portfolios.
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Taxation
Like-Kind Exchanges and Tenant-in-Common Properties
The availability of tax-deferred status for the purchase and sale of tenant-in-common interests in real estate, under Section 1031 of the Internal Revenue Code, offers new opportunities for investors. This article from Baker, Donelson, Bearman, Caldwell and Berkowitz explores the TIC ownership structure, including underlying legal concepts, requirements for eligibility and risks and pitfalls.
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Tax Management and Capital Gains
By thinking ahead and paying a long-term capital gain today, an investor can derive a net tax benefit in future years. This research brief from Parametric Portfolio Associates explores the tax-management strategy of realizing such gains in a portfolio of equities and quantifies how much this can add to after-tax performance. The authors evaluate the costs and benefits and consider the impact of fluctuating markets on this strategy.
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