At Vernal Point, we build customized long-term client portfolios on an after-tax basis around the risk appetite, liquidity needs, income requirements, and return objectives for each client.
We believe that families with multi-generational portfolios have a unique competitive advantage in terms of time horizon and tolerance for illiquidity that can be used in the pursuit of higher risk-equivalent returns.
We build client portfolios based on Vernal Point Investment Principles:
Focus on Alignment
We partner with investment managers who we feel have the best possible alignment with their investors. The managers that we work with are narrowly focused on a single investment strategy, have compensation structures tied to investor returns, and are invested meaningfully in these strategies alongside our clients.
Intrinsic Value Analysis
We invest with teams that focus on bottom-up, asset-by-asset underwriting with an emphasis on cash flow and return on invested capital. Our ability to track each manager on a position-by-position basis helps us build confidence in the strategy, allowing us to understand how the manager might perform in both rising and declining markets - and to know when to add money when unusual opportunities arise.
We believe controlling costs and taxes is one of the most reliable ways to create value for our clients and that these savings are uncorrelated to all asset classes. We build after-tax models for every manager we invest with, breaking down return sources by tax attribute and considering deductible vs. non-deductible expenses at the manager level.
When Active/When Passive
We estimate that the Vernal Point principles of alignment, intrinsic value, and tax control eliminate 90%+ of the investable universe of managers, allowing us to focus on a narrow subset of managers with the highest likelihood to generate exceptional performance for our clients.
When we are not able to find managers that meet all three Vernal Point Investment Principles, we prefer to hold passive, low-cost, plain-vanilla strategies (i.e. ETFs). We do not force sub-optimal portfolio exposures in order to fill “buckets”.
We work to convert complexity into opportunity through focused creativity and uncompromising execution.
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