kayne anderson rudnick...not pictured: curt biren worth.com october-november 2014 143 about kayne...

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Page 1: Kayne Anderson Rudnick...not pictured: Curt Biren worth.com october-november 2014 143 About Kayne Anderson Rudnick Ranked among the Top 10 of Barron’s list of Top Independent Financial
Page 2: Kayne Anderson Rudnick...not pictured: Curt Biren worth.com october-november 2014 143 About Kayne Anderson Rudnick Ranked among the Top 10 of Barron’s list of Top Independent Financial

Kayne Anderson Rudnick Caleb “Spuds” Powell, CPWA®, Managing Director; Darnel Bentz, Senior Vice President; Randall Allen, Senior Vice President; Thomas Connaghan, Senior Vice President; Diane Spirandelli, CFA®, Senior Vice President; Curt Biren, CPWA®, AIF®, Senior Vice President

Los Angeles, CA Leading Wealth Advisor

What are the advantages of separately managed accounts? By Kayne Anderson Rudnick

Information expressed herein is strictly the opinion of Kayne Anderson Rudnick and is provided for discussion purposes only. This report should not be considered a recommendation or solicitation to purchase securities. Past performance is no guarantee of future results.

Separately managed accounts, some-times referred to as “individually man-aged accounts” or simply “SMAs,” are portfolios of securities (stocks, bonds, or other investments) directly owned by the investor and managed by a professional investment manager. Like mutual funds, they often specialize in a particular aspect of the market such as small-cap value, large-cap growth or municipal bonds.

However, as their name implies, SMAs are managed separately for each investor, unlike mutual funds, which may be managed for hundreds or even thousands of investors as a group. As a result, SMAs provide unique customization, tax efficiency and control, which makes them appeal-ing to affluent investors in a position to take advantage of these benefits.

When you purchase shares of a mutual fund, you have shared owner-ship of the underlying securities with all the other investors in the fund. Accord-ingly, you cannot simply instruct the fund company to sell a holding, because the fund makes decisions on behalf of all shareholders, not individuals. With a separately managed account, however, you can direct the investment man-ager to customize your portfolio based on your personal needs or restrictions.

Tax efficiency is an example of such customization. Your investment

manager and tax advisor can work together to identify and sell from the SMA positions which have decreased in value, in order to harvest their losses. Sold positions are typically replaced with other, similar securities or are repurchased after the 30-day wash-sale period has passed; the losses are then used to offset capital-gains tax liability.

Conversely, a mutual fund may pass along to the investor embedded taxable capital gains on securities purchased by the fund months or years before. As a result, a client who has not received the full benefit of the securities’ price increases may end up paying taxes on results that occurred before he or she bought into the investment vehicle. With a separately managed account, you pay taxes only on capital gains incurred while you own the securities, and your cost basis for each security is the price at which it was purchased for the account.

Further, separately managed fixed-income accounts can be particularly effective in a rising interest-rate environment. In that environment, the values of bonds drops. However, with an SMA, an investor can hold the bonds to maturity. That way, an inves-tor avoids the downside of the market by collecting the interest and realizing the full maturity value versus someone

in a fund watching his or her value move up and down with the market. Additionally, if there is a major shift in investor preference from bonds to other asset classes, mutual fund portfolio managers may be forced to sell bonds in order to keep up with redemptions. In this case, a portfolio manager who invests for SMAs can buy those bonds at a discount. This benefits the SMA clients, who can simply hold those discounted bonds and realize their full income and maturity value.

An additional benefit of SMAs is their greater transparency. An inves-tor can more readily identify what individual securities he or she holds, the number of shares owned and their current value. SMAs have the further benefit of being “headline-insensi-tive.” This contrasts with mutual funds whose highly liquid nature subjects them to emotion-based sell-offs.

We recognize that every client has unique needs and circumstances and, thus, the variety of investment vehicles available in the marketplace serves an important purpose. However, for high net worth individuals with significant tax-planning needs and assets primarily allocated to nontax-deferred accounts, separately managed accounts can be an important tool for an effective wealth strategy.

Page 3: Kayne Anderson Rudnick...not pictured: Curt Biren worth.com october-november 2014 143 About Kayne Anderson Rudnick Ranked among the Top 10 of Barron’s list of Top Independent Financial

How to reach Kayne Anderson Rudnick

We are oriented toward quality—in our investments, in our service and in our business practices. To learn more, please contact us at 800.231.7414.

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Kayne Anderson Rudnick 1800 Avenue of the Stars, 2nd Floor, Los Angeles, CA 90067 800.231.7414 580 California Street, Suite 1750, San Francisco, CA 94104

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Assets Under Management $8.9 billion (as of 9/30/14)

Largest Client Net Worth $500 million+

Minimum Fee for Initial Meeting None required

Minimum Net Worth Requirement $1 million

Professional Services Provided Investment advisory and money management services

Compensation Method Asset-based fee (investment services)

Primary Custodian for Investor Assets Fidelity Investments

Financial Services Experience Powell, 21 years; Bentz, 13 years; Allen, 16 years; Connaghan, 18 years; Spirandelli, 43 years; Biren, 28 years

Email [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Website www.kayne.com

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“With a separately managed account, however, you can direct the investment manager to customize your portfolio based on your personal needs or restrictions.” —Kayne Anderson Rudnick

Front row: Diane Spirandelli, Caleb “Spuds” Powell; back row, left to right: Thomas Connaghan, Randall Allen, Darnel Bentz; not pictured: Curt Biren

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About Kayne Anderson Rudnick Ranked among the Top 10 of Barron’s list of Top Independent Financial Advisors for the last two years, Kayne Anderson Rudnick is a boutique investment advisory firm founded in 1984 to manage capital for its founders, including John Anderson (a Forbes 400 billionaire and the benefactor of UCLA’s Anderson School of Management). With offices in Los Angeles and San Francisco, the company manages assets for both high net worth individuals and institutions. Its advisors boast an average client relationship length of 11 years and a retention rate of over 95 percent, thanks to outstanding client service and personalized investment strategies designed around clients’ unique circumstances and objectives. Disciplined risk management and diversification are key components in helping clients achieve their goals. Accordingly, the company’s comprehensive platform offers proprietary investment strategies and a range of carefully selected, externally managed investment solutions. With 30 years of experience blending traditional and alternative investments, Kayne Anderson Rudnick is known for a commitment to high-quality business practices, investment strategies and wealth solutions.

Page 4: Kayne Anderson Rudnick...not pictured: Curt Biren worth.com october-november 2014 143 About Kayne Anderson Rudnick Ranked among the Top 10 of Barron’s list of Top Independent Financial

the evolution of financial intelligence

R E P R I N T E D F R O M

®

Caleb “Spuds” Powell, CPWA® Managing Director

Darnel Bentz Senior Vice President

Randall Allen Senior Vice President

Thomas Connaghan Senior Vice President

Diane Spirandelli, CFA® Senior Vice President

Curt Biren, CPWA®, AIF® Senior Vice President

Kayne Anderson Rudnick 1800 Avenue of the Stars, 2nd Floor

Los Angeles, CA 90067Tel. 800.231.7414

580 California Street, Suite 1750San Francisco, CA 94104

[email protected]@[email protected]

[email protected]@kayne.com

[email protected]

Kayne Anderson Rudnick is featured in Worth® 2014 Leading Wealth Advisors™, a special section in every edition of Worth® magazine. All persons and firms appearing in this section have completed questionnaires, have been vetted by an advisory group following submission by Worth®, and thereafter paid the standard fees to Worth® to be featured in this section. The information contained herein is for informational purposes, and although the list of advisors presented in this section is drawn from sources believed to be reliable and independently reviewed, the accuracy or completeness of this information is not guaranteed. No person or firm listed in this section should be construed as an endorsement by Worth®, and Worth® will not be responsible for the performance, acts or omissions of any such advisor. It should not be assumed that the past performance of any advisors featured in this special section will equal or be an indicator of future performance. Worth®, a Sandow Media publication, is a financial publisher and does not recommend or endorse investment, legal or tax advisors, investment strategies or particular investments. Those seeking specific investment advice should consider a qualified and licensed investment professional. Worth® is a registered trademark of Sandow Media LLC. See “About Us” for additional program details at http://www.worth.com/index.php/about-worth.