Abstract
According to the June 8, 2018, release from the US Federal Reserve, the combined unfunded liability of private and public pension funds stood at $3.9 trillion. This stunning failure to fund the future of many American retirees was avoidable. Throughout this book, I have cautioned investors about the dangers of making “long-term” assumptions about the potential of various investments based upon backward-looking data points. This chapter will compare the results of four investor surveys: IPI/Campden Family Performance Tracking, NACUBO, US Household Net Worth, and the Forbes 400 from 1997 to 2017.
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Institute for Private Investors (subsidiary of Campden Wealth) Family Performance Tracking Survey, 1997–2014. 2015–2017 data sourced from Campden Global Family Office Report published by Campden Research. Data for 2017 lacked a usable data set for family office performance. For 2017 I used the ratio of the IPI/Campden to NACUBO annualized returns from 1997 to 2006, which resulted in an assumed performance of 1.06 times the NACUBO return for 2017 (IPI/Campden 7.18%/NACUBO 6.75% = 1.06 times).
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Those who wish to study the NACUBO data in greater detail should note that this survey uses a June 30 calendar year end reporting period. Thus, in any given year, users should avoid drawing conclusions on the dispersion between NACUBO and the other three benchmarks (which report on the calendar year). The aggregated compounded annual growth rate is a reliable data point since in the 21 years of this study 246 out of 252 months will be common to all four benchmarks.
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Niall J. Gannon and Scott B. Seibert, CFA, “Forecasting Portfolio Returns: The Efficient Valuation Hypothesis” Seeking Alpha, March 6, 2018.
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2017 NACUBO-Commonfund Study of Endowments® (NCSE).
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Board of Governors of the Federal Reserve System, Financial Accounts of the United States, Second Quarter, 2017.
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Gannon, N.J. (2019). Defining Moment: Your Objectives, Assumptions, and Other Factors Affecting Long-Term Returns. In: Tailored Wealth Management. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-99780-3_9
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DOI: https://doi.org/10.1007/978-3-319-99780-3_9
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