The Performance of Trust Funds

The average trust fund in the United States has underperformed the S&P 500 by 2.3 percentage points annually during 2004-2014, according to a study released by the U.S. Trust. That may not be quite the indictment you think it is, as the specifics of underperformance were not examined. A lot of times, when you’re dealing with seven-figure portfolios, you start to enter that wealth preservation mode and U.S. Treasuries start to become an important of the picture.

If 25% to 50% of the principal is invested in things paying 3%, it makes sense that even shrewd stock pickers would have trouble keeping pace with a basic index fund. But it is also possible that the trust management was a result of mediocre investment selection that could have been fueled by poor incentives in the trust management field.

Shackelford O’Connor McSwain, one of the primary influences behind the original prudent man-investor … Read the rest of this article!