Introduction
Dear Readers,
we hope you enjoyed the month of May! Between the public holidays and the weather finally turning here in Berlin, we certainly cannot complain. Our team members made the most of it, with trips to Spain and Turkey and Ireland and New York still to come.
In May we conducted our so-called “surge meetings” (courtesy of Matthew Jarvis and his "Delivering Massive Value" book, from which we've taken many things to heart since), essentially compressing our Q1 quarterly reviews into a single week, and meeting with (almost) every one of our wealth management clients. It's something we make a point of doing, and judging by the conversations, it's not something every advisor prioritizes in quite the same way. (To quote one client: “In six years of working with my prior advisor, not once did their proactively offer to meet with me.”)
One recurring theme across those meetings was wealth transfer: how affluent parents should think about passing assets to their children in a way that is tax-efficient, structurally sound, and perhaps most importantly aligned with what they actually want for their family. We tackled it in this month's Family Matters, and it will continue to be a central theme in our client work over the summer.
We also had a good response to this month's The Quiet Return of Core-Satellite. A number of managers reached out after publication, which is always a good sign that a piece resonated well with our readers. While our managed accounts, meant for a client’s ‘core’ portfolio within their market Bucket, are almost entirely ETF-based, we are always on the hunt for potential ‘satellites’, both liquid and illiquid. So if the article resonated with you, and you have an idea of managers we should be looking at, shoot us a message.
Markets reached new all-time highs during the month, which is good news, though we continue to be cautious. The US-Iran situation remains unresolved, and in our experience, new highs and lingering geopolitical uncertainty tend to be an uncomfortable combination.
All the best,
Jan & the Cape May team
How we served our clients this month
Between quarterly reviews and a month full of public holidays, May kept us busier than the month might suggest. A few highlights:
Followed up with clients after our hedge fund event last month, finalizing first allocations under consideration of asset allocation and tax questions (if you’re interested in learning more about what we do here, don’t hesitate to reach out!)
Built a wealth concept for an entrepreneur ahead of a potential future sale of their company, taking into account how different exit scenarios would affect their path to financial independence, and discussed potential additions to their existing portfolio, such as bonds or commodities
Conducted an independent portfolio review for a single family office, assessing their current asset allocation and implementation to help them consider fit, fee structures, and alignment with their investment objectives
Developed ideas for a liquidity management strategy for a client looking to receive market-level returns without sacrificing accessibility, structuring their Market Bucket in a way that balances liquidity needs, income generation, and diversification across their portfolio
Worked through the interplay between capital protection structures, tax efficiency, and near-term liquidity needs for a client, outlining a set of next steps to address all three
Counselled a client and their family the structuring of a life interest (Nießbrauch) and potential inter-family gifting (Schenkung) arrangements, helping them think through how to transfer wealth to the next generation in a way that protects the parents' long-term income while minimizing the long-term inheritance tax burden
Reviewed a client's insurance coverage and outlined potential options for existing policies in light of their objectives (thank you Sebastian for your support on all things insurance!)
Strategized with a client on how to structure an equity stake in a new venture they are looking to join, contemplating between stock-based and virtual alternatives and their associated tax and commercial consequences
Assisted a client and their co-founder in how to structure the fundraise for their new ventures, discussing options such as convertible loans, bank loans, equity, and the resulting consequences on the trajectory of their venture
Worked with a client on a real estate joint venture they are looking to set up, covering topics such as bank introductions, compensation models for the JV partners, as well as the right commercial structure in light of their broader asset allocation
As always, if any of the above resonates with your situation, don't hesitate to reach out. the above resonates with your own situation, don't hesitate to reach out.
Cape May in the News
Jan once again made an appearance on the Marktgeflüster podcast, discussing topics such as the SpaceX IPO, family offices and how they invest, core-satellite strategies and the renaissance of active funds as well as other market news.
If you have a podcast, a blog, or another type of publication that you think would benefit from our views and network, don't hesitate to reach out.
Cape May Wealth Weekly
In May, we covered a number of topics:
In The Art of the Warm Intro, we discussed how you should best go about asking your financial advisor (or of course, any other intermediary) for assistance with your fundraise, covering the do’s and don’t’s, as well as sharing our template on how to best write your own ‘blurb’.
In The Quiet Return of Core-Satellite, we asked whether the core-satellite approach to portfolio construction is having a moment again, and how affluent investors should think about generating alpha in their liquid portfolios in the current environment.
In Liquidity Solutions for Your Venture Portfolio, we discussed how to improve the DPI of from your venture portfolio, covering options such as secondaries, share buybacks, and liquidations.
In Family Matters, we covered what affluent parents should know about transferring wealth to their children, ranging from the structural and tax considerations to the more personal questions that tend to get overlooked in purely financial conversations.
And as always, if there's something you'd like us to dig into that we haven't covered yet, we'd love to hear it.
Final Remarks
This wraps up the fifth edition of Cape May Monthly Review.
Following our hedge fund event in April, we have been in active follow-up conversations with a number of attendees and the interest in the asset class shows no sign of slowing down. If you missed the event and would like to hear more about how we're thinking about hedge funds and funds of hedge funds, reach out and we'd be happy to share our research and walk you through the opportunities we're currently looking at.
And as always, if there's a topic you'd like us to tackle in the newsletter, or if you'd like to be included in one of our upcoming events in Berlin, just let us know.
Thanks for reading, and enjoy the start of summer. ☀️
Cape May Wealth Advisors is a Berlin-based wealth management firm focused on helping affluent entrepreneurs find financial independence. If you are interested in learning more about how we can help you, reach out to us via email, and make sure to subscribe to our newsletter.