Blog W&A (5)

It’s July. Trump’s campaign promises have largely been fulfilled. DOGE blasted off and slashed $150 billion in expenses. Southern border encounters fell in June to 9,306 vs. 130,415 this month last year. Trump signed his $4.5 trillion OBBB on July 4th, the largest tax cut in history, and tariffs have begun pouring revenue into the US Treasury. Each of these major milestones contains intended and unintended economic consequences. Some will take time to evaluate, like the economic growth promises within the OBBB. Some have had time to simmer, like the tariff duties. This week, let’s examine the tariff digestion within the economy thus far.

The Revenues

Trump promised that tariffs would boost Federal Revenue.

Source: https://www.reuters.com/business/trumps-tariff-collections-expected-grow-june-us-budget-data-2025-07-11/

In July, the US Customs agency collected $27 billion in tariff duties on roughly $350 billion in imported goods. This equates to a roughly 8% effective rate so far, well below the “negotiating” rate currently levitating toward 20% as Trump applies maximum pressure worldwide into the August 1^st deadline. It’s unclear where the rate will settle, but Treasury secretary Bessent stated recently, “we will be taking in $300 billion this year alone.” For that to be the case, let’s pick $350 billion as the anticipated take and run the numbers to calculate the post-negotiations tariff rate. For the first six months of the year, US customs collected $84 billion in tariff duties. To reach $350 billion in tariff revenues, customs would have to collect $266 billion over the remainder of the year. US imports totaled $4.1 trillion in 2024, or $340 billion per month. For 2025, imports totaled $2.3 trillion within the first six months, well above that run rate as companies front-ran the April tariffs. Assuming a $4.2 trillion total for 2025, the effective tariff rate for the back half of the year must equal 14%, 6% above current levels.

Inflationary impact

Several categories within the June CPI report reflected tariff impacts. For instance, for those of you shopping for stoves or refrigerators, I have some bad news:

While prices for home appliances rose a mere .8% over the past year, they have risen 27% over the past month (annualized). Economists lump appliances into a category called “durable goods.” Durable goods include products with longer than 3-year life spans like cars, home furnishings, machinery, electronics, toys, tools, etc. These categories account for over 60% of overall imports and bear the brunt of the tariffs. Therefore, the best way to track the acute impact of the tariffs on inflation is to examine the inflation within the durable goods category.

For June, durable goods inflation increased 6.1% annualized, accelerating from .6% over the past year. As you can see in the above chart, outside of the COVID distortions, durable goods prices typically deflate, which has been the primary benefit of globalization for consumers for years. Before we panic, here are two points lost in the media. First, durable goods represent less than 10% of overall US GDP. Our economy is largely domestic with services accounting for 68% of all economic activity. The COVID inflation that bit so badly wasn’t goods inflation, it was services inflation. Therefore, any decrease in services inflation will more than offset an increase in durable goods or tariff inflation. Housing costs represent the largest contributor to services inflation and roughly 34% of inflation overall. Note the current trend in housing inflation:

Housing’s steady trend of disinflation has provided the bulk of disinflation overall. Yet, housing inflation at 3.8% over the past year remains above the 3% pre-COVID average. If we remove shelter from the equation… the year-over-year inflation rate for the USA falls from 2.7% to 2%… spot on the Fed’s 2% target:

Lastly, a jump in the effective tariff rate from 3% to 14% creates an upward price adjustment in durable goods, but not persistent inflation. A $100 Lego Death Star could become a $111 Lego Death Star due to the 11% increase in tariffs if fully passed along, but once it does, the observable disinflationary trend should resume. In other words, there is a difference between inflation and price adjustment. The tariffs create price adjustments, not inflation. And depending on the timing of the adjustments and dynamics in housing and services inflation, they may underwhelm the excitable given their lesser weight within the economy overall. Expect price adjustments in durable goods as tariffs bite, but don’t expect them to conjure a return to COVID-like inflation.

Growth Impact

Most economists, including us, expect tariff distortions to create some GDP drag. In fact, US GDP shrank .5% in the first quarter as imports surged in anticipation of tariff impositions. With trade somewhat normalizing in the second quarter, the Fed currently estimates a GDP growth rate of 2.6%, placing GDP growth for the first half just above 1%. This registers well below the 1.9% rate the Fed espouses as our long-term potential growth rate. However, while the first quarter growth rate anticipated tariffs, the second quarter growth rate included them. Given the disproportionate share of economic activity contributed by the US consumer, changes in unemployment and disposable income (spending capacity) influence GDP far more than tariff policy. A quick check of these vitals offers encouragement:

US employers added 147,000 jobs in June, up slightly from May and well within range of the last year’s average as the US economy grew nearly 3%.

Source: https://fred.stlouisfed.org/graph/fredgraph.png?g=1KI2w&height=490

While job growth has maintained loft, real disposable personal income gains have fallen towards levels more consistent with slower economic growth as wage pressures abate. Tariff price adjustments reduce real disposable personal incomes as would any reductions in government benefits. However, real disposable personal income also includes tax payments. Any reduction in tax rates would thereby boost real disposable personal income and spending capacity for consumers. While tariffs may reduce spending power, tax cuts increase it. While economists expect tariffs to subtract less than .5% from GDP next year, they also expect the tax cuts to add over 1% to GDP.

Perhaps this explains why markets are trading at all-time highs.

Enjoy the rest of your weekend!

-David

Sources: Yardeni, Federal Reserve Bank of St. Louis, Reuters

This communication and its contents are for informational and educational purposes only and should not be used as the sole basis for any investment decision. The information contained herein is based on publicly available sources believed to be reliable but is not a representation, expressed or implied, as to the accuracy, completeness, or correctness of said information. References to political figures or policies are for informational purposes only and do not represent an endorsement by Waddell & Associates. Any forward-looking statements reflect current opinions and assumptions and are subject to change without notice; actual results may differ materially. Past performance does not guarantee future results. Waddell & Associates may use artificial intelligence tools to help generate or summarize content; all outputs are reviewed by our team for accuracy and relevance.

July 18, 2025

It’s July. Trump’s campaign promises have largely been fulfilled. DOGE blasted off and slashed $150 billion in expenses. Southern border encounters fell in June to 9,306 vs. 130,415 this month last year. Trump signed his $4.5 trillion OBBB on July 4th, the largest tax cut in history, and tariffs have begun pouring revenue into the US Treasury. Each of these major milestones contains intended and unintended economic consequences. Some will take time to evaluate, like the economic growth promises within the OBBB. Some have had time to simmer, like the tariff duties. This week, let’s examine the tariff digestion within the economy thus far.

The Revenues

Trump promised that tariffs would boost Federal Revenue.

Source: https://www.reuters.com/business/trumps-tariff-collections-expected-grow-june-us-budget-data-2025-07-11/

In July, the US Customs agency collected $27 billion in tariff duties on roughly $350 billion in imported goods. This equates to a roughly 8% effective rate so far, well below the “negotiating” rate currently levitating toward 20% as Trump applies maximum pressure worldwide into the August 1^st deadline. It’s unclear where the rate will settle, but Treasury secretary Bessent stated recently, “we will be taking in $300 billion this year alone.” For that to be the case, let’s pick $350 billion as the anticipated take and run the numbers to calculate the post-negotiations tariff rate. For the first six months of the year, US customs collected $84 billion in tariff duties. To reach $350 billion in tariff revenues, customs would have to collect $266 billion over the remainder of the year. US imports totaled $4.1 trillion in 2024, or $340 billion per month. For 2025, imports totaled $2.3 trillion within the first six months, well above that run rate as companies front-ran the April tariffs. Assuming a $4.2 trillion total for 2025, the effective tariff rate for the back half of the year must equal 14%, 6% above current levels.

Inflationary impact

Several categories within the June CPI report reflected tariff impacts. For instance, for those of you shopping for stoves or refrigerators, I have some bad news:

While prices for home appliances rose a mere .8% over the past year, they have risen 27% over the past month (annualized). Economists lump appliances into a category called “durable goods.” Durable goods include products with longer than 3-year life spans like cars, home furnishings, machinery, electronics, toys, tools, etc. These categories account for over 60% of overall imports and bear the brunt of the tariffs. Therefore, the best way to track the acute impact of the tariffs on inflation is to examine the inflation within the durable goods category.

For June, durable goods inflation increased 6.1% annualized, accelerating from .6% over the past year. As you can see in the above chart, outside of the COVID distortions, durable goods prices typically deflate, which has been the primary benefit of globalization for consumers for years. Before we panic, here are two points lost in the media. First, durable goods represent less than 10% of overall US GDP. Our economy is largely domestic with services accounting for 68% of all economic activity. The COVID inflation that bit so badly wasn’t goods inflation, it was services inflation. Therefore, any decrease in services inflation will more than offset an increase in durable goods or tariff inflation. Housing costs represent the largest contributor to services inflation and roughly 34% of inflation overall. Note the current trend in housing inflation:

Housing’s steady trend of disinflation has provided the bulk of disinflation overall. Yet, housing inflation at 3.8% over the past year remains above the 3% pre-COVID average. If we remove shelter from the equation… the year-over-year inflation rate for the USA falls from 2.7% to 2%… spot on the Fed’s 2% target:

Lastly, a jump in the effective tariff rate from 3% to 14% creates an upward price adjustment in durable goods, but not persistent inflation. A $100 Lego Death Star could become a $111 Lego Death Star due to the 11% increase in tariffs if fully passed along, but once it does, the observable disinflationary trend should resume. In other words, there is a difference between inflation and price adjustment. The tariffs create price adjustments, not inflation. And depending on the timing of the adjustments and dynamics in housing and services inflation, they may underwhelm the excitable given their lesser weight within the economy overall. Expect price adjustments in durable goods as tariffs bite, but don’t expect them to conjure a return to COVID-like inflation.

Growth Impact

Most economists, including us, expect tariff distortions to create some GDP drag. In fact, US GDP shrank .5% in the first quarter as imports surged in anticipation of tariff impositions. With trade somewhat normalizing in the second quarter, the Fed currently estimates a GDP growth rate of 2.6%, placing GDP growth for the first half just above 1%. This registers well below the 1.9% rate the Fed espouses as our long-term potential growth rate. However, while the first quarter growth rate anticipated tariffs, the second quarter growth rate included them. Given the disproportionate share of economic activity contributed by the US consumer, changes in unemployment and disposable income (spending capacity) influence GDP far more than tariff policy. A quick check of these vitals offers encouragement:

Source: https://fred.stlouisfed.org/graph/fredgraph.png?g=1KI2H&height=490

US employers added 147,000 jobs in June, up slightly from May and well within range of the last year’s average as the US economy grew nearly 3%.

Source: https://fred.stlouisfed.org/graph/fredgraph.png?g=1KI2w&height=490

While job growth has maintained loft, real disposable personal income gains have fallen towards levels more consistent with slower economic growth as wage pressures abate. Tariff price adjustments reduce real disposable personal incomes as would any reductions in government benefits. However, real disposable personal income also includes tax payments. Any reduction in tax rates would thereby boost real disposable personal income and spending capacity for consumers. While tariffs may reduce spending power, tax cuts increase it. While economists expect tariffs to subtract less than .5% from GDP next year, they also expect the tax cuts to add over 1% to GDP.

Perhaps this explains why markets are trading at all-time highs.

Enjoy the rest of your weekend!

-David

Sources: Yardeni, Federal Reserve Bank of St. Louis, Reuters

This communication and its contents are for informational and educational purposes only and should not be used as the sole basis for any investment decision. The information contained herein is based on publicly available sources believed to be reliable but is not a representation, expressed or implied, as to the accuracy, completeness, or correctness of said information. References to political figures or policies are for informational purposes only and do not represent an endorsement by Waddell & Associates. Any forward-looking statements reflect current opinions and assumptions and are subject to change without notice; actual results may differ materially. Past performance does not guarantee future results. Waddell & Associates may use artificial intelligence tools to help generate or summarize content; all outputs are reviewed by our team for accuracy and relevance.
">Tallying Tariffs

The Revenues

Trump promised that tariffs would boost Federal Revenue.

Inflationary impact

Several categories within the June CPI report reflected tariff impacts. For instance, for those of you shopping for stoves or refrigerators, I have some bad news:

Growth Impact

US employers added 147,000 jobs in June, up slightly from May and well within range of the last year’s average as the US economy grew nearly 3%.

Perhaps this explains why markets are trading at all-time highs.

Enjoy the rest of your weekend!

-David

Sources: Yardeni, Federal Reserve Bank of St. Louis, Reuters

" class="link-chevron"> Watch Now

As we pass the halfway mark of 2025, one of the important themes shaping the investment landscape is the performance of the U.S. dollar. As the world’s reserve currency, the dollar wields unique influence over international markets from equity and bond returns to commodity pricing and capital flows. And this year, its story is one of meaningful weakness.

As measured by the DXY (U.S. Dollar Index), the greenback is down roughly 10% year-to-date. The index, which tracks the dollar’s value relative to a basket of other currencies (The euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc), hasn’t experienced a double-digit annual drop since 2017—and before that, 2002. Moves of this magnitude have been rare in recent memory, and it materially impacts investor portfolios.

Why a Weaker Dollar Matters

For investors with international equity exposure, this year’s dollar decline has been a major tailwind. When the dollar weakens, gains in foreign markets, priced in local currency, translate into even stronger returns in dollar terms.

And the results have been impressive:

Developed market equities, as represented by the iShares Core MSCI EAFE ETF (IEFA), are up 21% YTD in USD terms.

Emerging market equities, via the iShares Core MSCI Emerging Markets ETF (IEMG), are up 16% YTD.

But if you remove the impact of the falling dollar, those returns fall to 11% and 6%, respectively. In other words, currency appreciation accounted for half the gains. That’s the power of foreign exchange working for, rather than against, global investors.

A Trend Reversal?

The shift represents a clear departure from recent history. For much of the past decade, a strong dollar suppressed foreign asset performance. When local currencies weakened against the dollar, U.S.-based investors often saw overseas gains erased in translation. The USD strength underpinned an era of U.S. asset outperformance and contributed to consistent home bias.

But 2025 is reminding investors that when the dollar falls, global diversification pays. And after 15 years of U.S. outperformance, the valuation gap between US and international assets has become increasingly difficult to ignore. U.S. assets are expensive relative to their global peers, and dollar weakness gives international markets both valuation appeal and performance momentum.

Reassessing Global Assumptions

It can be easy to fall victim to the narratives of recent market performance, but an environment with a weakening dollar necessitates a fresh look at portfolio factors, specifically:

Currency exposure, historically viewed as a risk factor, is now a contributor to returns, particularly for investors in unhedged international allocations.
Global diversification, often a defensive strategy, is now a source of alpha as foreign markets outperform and currency gains compound returns.
While U.S. multinationals may benefit from currency translation, it’s international companies with revenues tied to strengthening local currencies that gain the most, both in earnings and relative valuation. The weaker dollar helps level the playing field, making non-U.S. equities more competitive on a global basis.

Enjoy the rest of your weekend!

-Matt

Sources: Ycharts, Topdown Charts, LSEG

July 11, 2025

As we pass the halfway mark of 2025, one of the important themes shaping the investment landscape is the performance of the U.S. dollar. As the world’s reserve currency, the dollar wields unique influence over international markets from equity and bond returns to commodity pricing and capital flows. And this year, its story is one of meaningful weakness.

As measured by the DXY (U.S. Dollar Index), the greenback is down roughly 10% year-to-date. The index, which tracks the dollar’s value relative to a basket of other currencies (The euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc), hasn’t experienced a double-digit annual drop since 2017—and before that, 2002. Moves of this magnitude have been rare in recent memory, and it materially impacts investor portfolios.

Why a Weaker Dollar Matters

For investors with international equity exposure, this year’s dollar decline has been a major tailwind. When the dollar weakens, gains in foreign markets, priced in local currency, translate into even stronger returns in dollar terms.

And the results have been impressive:

Developed market equities, as represented by the iShares Core MSCI EAFE ETF (IEFA), are up 21% YTD in USD terms.

Emerging market equities, via the iShares Core MSCI Emerging Markets ETF (IEMG), are up 16% YTD.

But if you remove the impact of the falling dollar, those returns fall to 11% and 6%, respectively. In other words, currency appreciation accounted for half the gains. That’s the power of foreign exchange working for, rather than against, global investors.

A Trend Reversal?

The shift represents a clear departure from recent history. For much of the past decade, a strong dollar suppressed foreign asset performance. When local currencies weakened against the dollar, U.S.-based investors often saw overseas gains erased in translation. The USD strength underpinned an era of U.S. asset outperformance and contributed to consistent home bias.

But 2025 is reminding investors that when the dollar falls, global diversification pays. And after 15 years of U.S. outperformance, the valuation gap between US and international assets has become increasingly difficult to ignore. U.S. assets are expensive relative to their global peers, and dollar weakness gives international markets both valuation appeal and performance momentum.

Reassessing Global Assumptions

It can be easy to fall victim to the narratives of recent market performance, but an environment with a weakening dollar necessitates a fresh look at portfolio factors, specifically:

Currency exposure, historically viewed as a risk factor, is now a contributor to returns, particularly for investors in unhedged international allocations.

Global diversification, often a defensive strategy, is now a source of alpha as foreign markets outperform and currency gains compound returns.

While U.S. multinationals may benefit from currency translation, it’s international companies with revenues tied to strengthening local currencies that gain the most, both in earnings and relative valuation. The weaker dollar helps level the playing field, making non-U.S. equities more competitive on a global basis.

Enjoy the rest of your weekend!

-Matt

Sources: Ycharts, Topdown Charts, LSEG

This communication and its contents are for informational and educational purposes only and should not be used as the sole basis for any investment decision. The information contained herein is based on publicly available sources believed to be reliable but is not a representation, expressed or implied, as to the accuracy, completeness, or correctness of said information. Past performance does not guarantee future results. Waddell & Associates may use artificial intelligence tools to help generate or summarize content; all outputs are reviewed by our team for accuracy and relevance.
">U.S. Dollar: Implications for Global Returns

Why a Weaker Dollar Matters

And the results have been impressive:

Developed market equities, as represented by the iShares Core MSCI EAFE ETF (IEFA), are up 21% YTD in USD terms.

Emerging market equities, via the iShares Core MSCI Emerging Markets ETF (IEMG), are up 16% YTD.

A Trend Reversal?

Reassessing Global Assumptions

It can be easy to fall victim to the narratives of recent market performance, but an environment with a weakening dollar necessitates a fresh look at portfolio factors, specifically:

Currency exposure, historically viewed as a risk factor, is now a contributor to returns, particularly for investors in unhedged international allocations.
Global diversification, often a defensive strategy, is now a source of alpha as foreign markets outperform and currency gains compound returns.
While U.S. multinationals may benefit from currency translation, it’s international companies with revenues tied to strengthening local currencies that gain the most, both in earnings and relative valuation. The weaker dollar helps level the playing field, making non-U.S. equities more competitive on a global basis.

Enjoy the rest of your weekend!

-Matt

Sources: Ycharts, Topdown Charts, LSEG

" class="link-chevron"> Watch Now

When I sit across from clients discussing their estate plans, the conversation rarely stays focused on tax strategies or trust structures for long.

Inevitably, we find ourselves talking about deeper concerns: Will this money help or hurt my children? How do I prepare them for the responsibility that comes with wealth? What if they become entitled or lose their drive?

These aren’t financial questions—they’re emotional ones. And in my experience, the emotional complexity of inheritance often proves more challenging to navigate than the technical aspects.

The weight of generational wealth

For families stewarding significant wealth, inheritance carries profound emotional weight. Research shows that the majority of Americans believe passing on family values and traditions matters more than the monetary inheritance itself.

This perspective often becomes even more pronounced among high-net-worth families, where the stakes—both financial and emotional—are substantially higher.

I regularly work with clients who’ve built considerable wealth through entrepreneurship or executive careers. They’ve experienced firsthand the discipline, sacrifice, and strategic thinking required to create that wealth. Now they’re grappling with how to transfer not just the assets, but the wisdom and values that created them.

Beyond “fair” versus “equal”

One of the most emotionally charged aspects of inheritance planning involves distribution decisions. Should everything be divided equally among children? What if one child has special needs? What if another has demonstrated poor financial judgment?

Fair isn’t always equal, and equal isn’t always fair.

I’ve seen parents struggle with leaving more to a child with disabilities or fewer financial resources. Without clear communication about their reasoning, these well-intentioned decisions can create lasting resentment among siblings.

The solution isn’t necessarily changing the distribution—it’s having honest conversations about the “why” behind your decisions. When parents share their reasoning, heirs typically accept the plan, even when it’s unequal. Without this context, siblings are left to speculate about motivations after you’re gone.

Navigating Inherited Wealth

Perhaps no concern weighs more heavily on wealthy parents than the fear of raising children who are over-reliant on family wealth. How do you provide security without destroying motivation?

I don’t advocate hiding wealth from your heirs, but I do recommend thoughtful structure. Many families use milestone distributions, where heirs receive portions of their inheritance at different life stages—perhaps at ages 25, 35, and 45. This approach allows time for personal development and career establishment before accessing larger amounts.

For more complex situations involving addiction or persistent poor judgment, we often recommend professional trustees or co-trustees. This protects the assets while giving heirs time and support to address their challenges.

The education imperative

Financial literacy becomes critical when significant wealth is involved. You may assume your children understand money because you raised them, but without explicit financial education, they’ll struggle to manage their inheritance responsibly.

Start this education early, but recognize it’s an ongoing process. As your children mature, consider connecting them with financial professionals who can provide mentorship on increasingly complex topics. Whether they ultimately inherit hundreds of thousands or tens of millions, they’ll be better prepared with a solid foundation.

Family meetings as a strategic tool

One of the most effective approaches for managing inheritance emotions is the structured family meeting. These gatherings serve multiple purposes: education, transparency, and relationship building.

Before any family meeting, we work with clients to determine appropriate information sharing. Not every young adult needs complete financial details, but adult children taking on family responsibilities do need to understand the broader landscape.

These meetings can evolve as your children mature. What begins as basic financial education can grow into strategic discussions about family values, philanthropic goals, and long-term wealth management.

The strategic partnership approach

At Waddell & Associates, we view inheritance planning as one component of our comprehensive wealth strategy relationship. We’re not just implementing your vision—we’re helping you think through the emotional and psychological complexities that come with significant wealth transfers.

This is where having a strategic thinking partner can become invaluable. We can help you navigate the difficult conversations, structure distributions that reflect your values, and prepare the next generation for the responsibilities ahead.

In my experience, managing generational wealth transfer requires both technical expertise and emotional intelligence. With thoughtful planning and clear communication, inheritance can strengthen family bonds rather than strain them, creating a legacy that reflects your values for generations to come.

Ready to explore how thoughtful inheritance planning can strengthen your family’s future?

We’d welcome the opportunity to discuss your specific situation and help you navigate both the financial and emotional aspects of wealth transfer. Learn about the Waddell & Associates difference and explore how you can work with us. We’d love to hear from you.

Sean Gould is a Senior Wealth Strategist with Waddell & Associates based in Memphis.

July 2, 2025

When I sit across from clients discussing their estate plans, the conversation rarely stays focused on tax strategies or trust structures for long.

Inevitably, we find ourselves talking about deeper concerns: Will this money help or hurt my children? How do I prepare them for the responsibility that comes with wealth? What if they become entitled or lose their drive?

These aren’t financial questions—they’re emotional ones. And in my experience, the emotional complexity of inheritance often proves more challenging to navigate than the technical aspects.

The weight of generational wealth

For families stewarding significant wealth, inheritance carries profound emotional weight. Research shows that the majority of Americans believe passing on family values and traditions matters more than the monetary inheritance itself.

This perspective often becomes even more pronounced among high-net-worth families, where the stakes—both financial and emotional—are substantially higher.

I regularly work with clients who’ve built considerable wealth through entrepreneurship or executive careers. They’ve experienced firsthand the discipline, sacrifice, and strategic thinking required to create that wealth. Now they’re grappling with how to transfer not just the assets, but the wisdom and values that created them.

Beyond “fair” versus “equal”

Fair isn’t always equal, and equal isn’t always fair.

Navigating Inherited Wealth

Perhaps no concern weighs more heavily on wealthy parents than the fear of raising children who are over-reliant on family wealth. How do you provide security without destroying motivation?

The education imperative

Family meetings as a strategic tool

One of the most effective approaches for managing inheritance emotions is the structured family meeting. These gatherings serve multiple purposes: education, transparency, and relationship building.

The strategic partnership approach

Ready to explore how thoughtful inheritance planning can strengthen your family’s future?

Sean Gould is a Senior Wealth Strategist with Waddell & Associates based in Memphis.

">How Money Shapes Family Dynamics: The Emotional Side of Inheritance When I sit across from clients discussing their estate plans, the conversation rarely stays focused on tax strategies or trust structures for long.

These aren’t financial questions—they’re emotional ones. And in my experience, the emotional complexity of inheritance often proves more challenging to navigate than the technical aspects.

The weight of generational wealth

This perspective often becomes even more pronounced among high-net-worth families, where the stakes—both financial and emotional—are substantially higher.

Beyond “fair” versus “equal”

Fair isn’t always equal, and equal isn’t always fair.

Navigating Inherited Wealth

Perhaps no concern weighs more heavily on wealthy parents than the fear of raising children who are over-reliant on family wealth. How do you provide security without destroying motivation?

The education imperative

Family meetings as a strategic tool

One of the most effective approaches for managing inheritance emotions is the structured family meeting. These gatherings serve multiple purposes: education, transparency, and relationship building.

The strategic partnership approach

Ready to explore how thoughtful inheritance planning can strengthen your family’s future?

Sean Gould is a Senior Wealth Strategist with Waddell & Associates based in Memphis.

" class="link-chevron"> Watch Now

What a roller coaster of a first half! As I’ve told many, the first few months of 2025 have felt like a few years at this point. New administration—check. Liberation Day—check. Tax bill—check. Middle East conflict—check. New all-time highs—check. And while we spend much of our time looking forward, since we’ve reached the halfway mark of 2025, I think it’s an appropriate time to look back at the first half of the year.

At the outset of the year, the median 2025 year-end target for the S&P 500 from strategists across Wall Street sat at 6,600, or a 12% gain. Today the index sits at nearly 6,175, up ~5% on the year. Most strategists were forecasting some market appreciation, while strategists at Oppenheimer, Wells, Deutchse, and even Yardeni predicted nearly 20% returns this year.

As we opined in our 2025 outlook presentation, we were cautiously optimistic that the bull market would continue, but likely in a more muted fashion. After big returns in 2023 and 2024, returns in year 3 of bull markets typically take a breather, averaging a modest 8%. Halfway through the year, we’re right on track.

Chart showing Sp 500 Returns In First 3 Yrs Bull Mkt

If you missed the first half of the year and woke up today +5% year-to-date, congratulations on avoiding the news cycles. Funny how that works! Volatility, as measured by the VIX, ballooned north of 60 on April 7^th and crashed to near 16 today (Friday, June 27^th, 2025).

Similarly, high yield spreads are down 33% over the same time. Even oil prices that once rocketed on escalating tensions in the Middle East cratered -12% last week on news of a ceasefire. Many markets are back at all-time highs, having recalibrated to the news frequency and distribution methods of the new US administration.

Though the S&P sits +5% this year, the source of return inside the US has varied. Take the Mag-7. Combined, they are mostly flat on the year, with Apple and Tesla lagging and Meta, Microsoft, and Nvidia leading the way:

chart showing Magnificent 8 returns year to date

Source: YCharts, 6/27/2025

Outside of US equities, international stocks are up 19% (ETF: IEFA), while emerging markets are up 16% (ETF: EEM). Bond investors have been paid as well, with various US bond indices up between 3-4% year-to-date (AGG, LQD, and HYG, etc.). Not to be outdone, gold and silver are both up 25% (ETF: GLD & SLV). Overall, it’s been a great start to the year across most asset classes!

What lies ahead?

Of course we can’t just look backwards, though! Looking ahead, we are moving towards what are known as the seasonally weak months of the early fall. However, we first need to navigate July.

What makes this July unique is the volatility wind-down from April. When volatility blows out like it did in April, volatility-control funds, by nature of their rules, pare down exposure to keep overall portfolio volatility at a certain level. But, as realized volatility rolls off, they go from net sellers to net buyers. And for the folks that follow this space closely, next month the volatility metrics tell us vol-control funds will be big buyers—so big that the projected monthly purchase from vol-control funds is the biggest it’s ever been as far back as the data has been tracked (2004). On to the second half!

Have a great weekend!

-Matt

Sources: YCharts, Nomura Asset Management

This communication and its contents are for informational and educational purposes only and should not be used as the sole basis for any investment decision. Waddell & Associates does not provide personalized investment advice through this communication. The information contained herein is based on publicly available sources believed to be reliable but is not a representation, expressed or implied, as to the accuracy, completeness, or correctness of said information. Past performance does not guarantee future results.

June 29, 2025

What a roller coaster of a first half! As I’ve told many, the first few months of 2025 have felt like a few years at this point. New administration—check. Liberation Day—check. Tax bill—check. Middle East conflict—check. New all-time highs—check. And while we spend much of our time looking forward, since we’ve reached the halfway mark of 2025, I think it’s an appropriate time to look back at the first half of the year.

At the outset of the year, the median 2025 year-end target for the S&P 500 from strategists across Wall Street sat at 6,600, or a 12% gain. Today the index sits at nearly 6,175, up ~5% on the year. Most strategists were forecasting some market appreciation, while strategists at Oppenheimer, Wells, Deutchse, and even Yardeni predicted nearly 20% returns this year.

As we opined in our 2025 outlook presentation, we were cautiously optimistic that the bull market would continue, but likely in a more muted fashion. After big returns in 2023 and 2024, returns in year 3 of bull markets typically take a breather, averaging a modest 8%. Halfway through the year, we’re right on track.

If you missed the first half of the year and woke up today +5% year-to-date, congratulations on avoiding the news cycles. Funny how that works! Volatility, as measured by the VIX, ballooned north of 60 on April 7^th and crashed to near 16 today (Friday, June 27^th, 2025).

Similarly, high yield spreads are down 33% over the same time. Even oil prices that once rocketed on escalating tensions in the Middle East cratered -12% last week on news of a ceasefire. Many markets are back at all-time highs, having recalibrated to the news frequency and distribution methods of the new US administration.

Though the S&P sits +5% this year, the source of return inside the US has varied. Take the Mag-7. Combined, they are mostly flat on the year, with Apple and Tesla lagging and Meta, Microsoft, and Nvidia leading the way:

Source: YCharts, 6/27/2025

Outside of US equities, international stocks are up 19% (ETF: IEFA), while emerging markets are up 16% (ETF: EEM). Bond investors have been paid as well, with various US bond indices up between 3-4% year-to-date (AGG, LQD, and HYG, etc.). Not to be outdone, gold and silver are both up 25% (ETF: GLD & SLV). Overall, it’s been a great start to the year across most asset classes!

What lies ahead?

Of course we can’t just look backwards, though! Looking ahead, we are moving towards what are known as the seasonally weak months of the early fall. However, we first need to navigate July.

What makes this July unique is the volatility wind-down from April. When volatility blows out like it did in April, volatility-control funds, by nature of their rules, pare down exposure to keep overall portfolio volatility at a certain level. But, as realized volatility rolls off, they go from net sellers to net buyers. And for the folks that follow this space closely, next month the volatility metrics tell us vol-control funds will be big buyers—so big that the projected monthly purchase from vol-control funds is the biggest it’s ever been as far back as the data has been tracked (2004). On to the second half!

Have a great weekend!

-Matt

Sources: YCharts, Nomura Asset Management

This communication and its contents are for informational and educational purposes only and should not be used as the sole basis for any investment decision. Waddell & Associates does not provide personalized investment advice through this communication. The information contained herein is based on publicly available sources believed to be reliable but is not a representation, expressed or implied, as to the accuracy, completeness, or correctness of said information. Past performance does not guarantee future results.

">Halftime Highs!

Source: YCharts, 6/27/2025

What lies ahead?

Of course we can’t just look backwards, though! Looking ahead, we are moving towards what are known as the seasonally weak months of the early fall. However, we first need to navigate July.

Have a great weekend!

-Matt

Sources: YCharts, Nomura Asset Management

" class="link-chevron"> Watch Now

Football is wrapped. Basketball is (nearly) in the books. We’ve officially entered the dog days of summer. With it, US equity markets have rebounded sharply from the lows of “Liberation Day”, and the S&P 500 sits less than 3% from the all-time closing high on February 19th. Stock sentiment has recalibrated with this V-shape recovery:

As we discussed in our Market Outlook from February, it was likely a year to take off, and my guess is that most of Wall Street is out enjoying the Hamptons. For now, investors should continue to capitalize on opportunities when sentiment is overly bullish or bearish and allow it to serve as a guide for intermediate-term price action.

All this means is it’s officially baseball season. As has been said before, sports are more than entertainment—they’re a classroom for life. They deliver lessons, memories, and moments that shape our character. Last week, Arkansas exited the Men’s College World Series after a couple of tough breaks. It stings. Those players will carry that taste for a while. But the most powerful moment came after the final out, and it offered a lesson that’s just as relevant to our work as it is to theirs.

The Scene of the Crime

The Razorbacks led 5–3 in the bottom of the ninth. Two outs. Runners on first and second. A line drive heads to left field—straight to Charles Davalan, the Hogs’ left fielder. He hadn’t made an error all season. Seriously. But in this moment, he misjudges the ball. It skips past him to the wall, the runners score, and the game is tied. Arkansas would eventually lose in extra innings. Ouch. Here’s the replay.

Imagine the replay in his head… a single play that will live with him for a long time.

But then, something awesome happened. As cameras kept rolling, Charles was swarmed—not with criticism, but compassion. Coaches and teammates. Tears and hugs. Encouragement and support. Here’s the video. Charles was in a rough spot, but his coaches and teammates were there when he needed them most.

Why Work with an Advisor?

So, what does this have to do with financial planning?

It’s a question we hear often: Why should I hire an advisor to manage my financial life?

Here’s why: because, like Arkansas’ coaches and teammates, we’re not just there when you hit a home run. We’re by your side through the errors, the strikeouts, the walks, the wild pitches. When faced with an obstacle, we’re right alongside. A good advisor—like a good coach or teammate—offers insight, advice, perspective, and calm in the midst of a storm. Financial planning isn’t one-size-fits-all. It’s personal. It’s long-term. And it’s a journey best traveled with someone who’s invested in you.

So, build your village. Find your coach, and partner with a strategist who’s there for the big moments and the hard ones. As markets revisit all-time highs, the value of your advisor relationship will provide the most alpha to your financial plan over time.

That’s all for this week.

Cheers,

Matt

Sources: LSEG Datastream and Yardeni Research

June 20, 2025

Football is wrapped. Basketball is (nearly) in the books. We’ve officially entered the dog days of summer. With it, US equity markets have rebounded sharply from the lows of “Liberation Day”, and the S&P 500 sits less than 3% from the all-time closing high on February 19th. Stock sentiment has recalibrated with this V-shape recovery:

As we discussed in our Market Outlook from February, it was likely a year to take off, and my guess is that most of Wall Street is out enjoying the Hamptons. For now, investors should continue to capitalize on opportunities when sentiment is overly bullish or bearish and allow it to serve as a guide for intermediate-term price action.

All this means is it’s officially baseball season. As has been said before, sports are more than entertainment—they’re a classroom for life. They deliver lessons, memories, and moments that shape our character. Last week, Arkansas exited the Men’s College World Series after a couple of tough breaks. It stings. Those players will carry that taste for a while. But the most powerful moment came after the final out, and it offered a lesson that’s just as relevant to our work as it is to theirs.

The Scene of the Crime

Imagine the replay in his head… a single play that will live with him for a long time.

Why Work with an Advisor?

So, what does this have to do with financial planning?

It’s a question we hear often: Why should I hire an advisor to manage my financial life?

That’s all for this week.

Cheers,

Matt

Sources: LSEG Datastream and Yardeni Research

">The Value of a Good Teammate (and Advisor) Football is wrapped. Basketball is (nearly) in the books. We’ve officially entered the dog days of summer. With it, US equity markets have rebounded sharply from the lows of “Liberation Day”, and the S&P 500 sits less than 3% from the all-time closing high on February 19th. Stock sentiment has recalibrated with this V-shape recovery:

The Scene of the Crime

Imagine the replay in his head… a single play that will live with him for a long time.

Why Work with an Advisor?

So, what does this have to do with financial planning?

It’s a question we hear often: Why should I hire an advisor to manage my financial life?

That’s all for this week.

Cheers,

Matt

Sources: LSEG Datastream and Yardeni Research

" class="link-chevron"> Watch Now

As goes the US consumer, so goes the American economy. Many economic and investment maxims fail to stand the test of time. This one does. The most powerful economic engine on the planet remains an American with a credit card. Consider this data from the full year of 2024:

US nominal GDP for the calendar year ending 12/31/24 totaled $29 trillion. Consumer spending accounted for $19.8 trillion of that figure. To put this in perspective, China’s entire economy generated $18.8 trillion of GDP in 2024. Not only does consumption comprise the lion’s share of US GDP, but also the lion’s share of US GDP growth. The chart below chronicles the percentage of total GDP growth contributed by consumer spending growth:

Over the last decade and a half, consumer spending growth has driven 65% of annual US GDP growth. The one year when consumption declined, the US economy fell into recession. As is said, “As goes the US consumer…”

This week, amid all the confusion, anxiety, misinformation, and marketplace turmoil that Trump’s “Liberation Day” and Israel’s attack on Iran have triggered, let’s check the U.S. consumer’s vitals to see if any apparent weakness there might be fermenting hidden weakness elsewhere.

Net Worth

The US consumer net worth dipped slightly from record levels in the first quarter due to a pullback in equity prices. Equity prices have since recovered, reclaiming lost ground. With one-fifth of the US population now over the age of 65, net worth levels must remain healthy to support consumer confidence and retiree spending levels. For now, healthy net worth should sustain healthy spending.

Real Disposable Income

While net worth supports spending capacity, real disposable income powers it daily. This calculation measures after-tax income adjusted for inflation. While many analysts focus on the employment data to determine consumer viability, jobs serve as a means to an end, and wages are the end. This number also includes government support inflows and investment income. The monthly employment reports do not capture these meaningful contributors. In the most recent data, real disposable income spending capacity rose 3% year-over-year, reflecting wage growth, social security inflation, and lower overall inflation levels. The US consumer exited April with substantial income-supported purchasing power.

Net Savings

The chart above captures consumer saving patterns, including the COVID stimulus anomaly. Note that consumers saved a significant portion of their stimulus payments, greatly enhancing household net worth during the period. The rapid drawdown into mid-2022 reflects the impact of record inflation, which rapidly depleted spending capacity. Since then, consumer savings have returned to more normal levels around 5%. Changes in savings activity serve as a psychological barometer for economists. For example, while consumers received healthy income gains in April, they spent less of it than in previous months, boosting savings levels. This likely correlates with the slight downtick in net worth and the large uptick in uncertainty caused by “Liberation Day”. This could indicate more cautious consumer behavior ahead, even with resilient income flows, but not enough to drive the economy into recession.

Debt Service Capacity

Consumers have multiple sources to fund their spending. As discussed, net worth levels remain healthy, disposable income levels remain healthy, and savings levels fall well within the historic norms that support spending. If needed, consumers can also draw on mortgages, credit cards, and credit lines to fund their consumption. During the current cycle, elevated interest rate levels make this somewhat problematic with 7% mortgage rates and 25% credit card rates. Fortunately, because the government overfilled our net worth reservoirs, consumers have relied less on credit during this cycle than in previous cycles. Media commentary on credit card debt levels and defaults rings false alarms. As my father taught me, it’s not the size of the note that matters – it’s your ability to tote the note that matters. Currently, US consumers spend less on debt service today than they did pre-COVID, even with far higher interest rates. These levels reflect early economic cycle behavior rather than late economic cycle behavior.

Real Consumer Spending

Consumers spent 3% more in May of 2025 than they did in May of 2024. This pace continues the robust spending levels that powered the 2024 economy to a nearly 3% growth rate overall. I have added the long lookback on the chart above to highlight just how impressive post-COVID consumption trends have been. Despite the pandemic, massive supply chain disruptions, historic inflation, the most aggressive interest rate hikes in history, the war in Europe, the global tariff shock and now elevated conflict in the Middle East, the US consumer has continued spending with historic vigor, without depleting savings and without overusing. Should some exogenous shock trigger recession, the health of the US consumer would likely restrict its depth. Absent an exogenous shock, the health of the US consumer foretells continued health for the US economy.

Have a great weekend!

-David

Sources: US Bureau of Economic Analysis, Federal Reserve Bank of St. Louis

June 14, 2025

As goes the US consumer, so goes the American economy. Many economic and investment maxims fail to stand the test of time. This one does. The most powerful economic engine on the planet remains an American with a credit card. Consider this data from the full year of 2024:

US nominal GDP for the calendar year ending 12/31/24 totaled $29 trillion. Consumer spending accounted for $19.8 trillion of that figure. To put this in perspective, China’s entire economy generated $18.8 trillion of GDP in 2024. Not only does consumption comprise the lion’s share of US GDP, but also the lion’s share of US GDP growth. The chart below chronicles the percentage of total GDP growth contributed by consumer spending growth:

Over the last decade and a half, consumer spending growth has driven 65% of annual US GDP growth. The one year when consumption declined, the US economy fell into recession. As is said, “As goes the US consumer…”

This week, amid all the confusion, anxiety, misinformation, and marketplace turmoil that Trump’s “Liberation Day” and Israel’s attack on Iran have triggered, let’s check the U.S. consumer’s vitals to see if any apparent weakness there might be fermenting hidden weakness elsewhere.

Net Worth

The US consumer net worth dipped slightly from record levels in the first quarter due to a pullback in equity prices. Equity prices have since recovered, reclaiming lost ground. With one-fifth of the US population now over the age of 65, net worth levels must remain healthy to support consumer confidence and retiree spending levels. For now, healthy net worth should sustain healthy spending.

Real Disposable Income

While net worth supports spending capacity, real disposable income powers it daily. This calculation measures after-tax income adjusted for inflation. While many analysts focus on the employment data to determine consumer viability, jobs serve as a means to an end, and wages are the end. This number also includes government support inflows and investment income. The monthly employment reports do not capture these meaningful contributors. In the most recent data, real disposable income spending capacity rose 3% year-over-year, reflecting wage growth, social security inflation, and lower overall inflation levels. The US consumer exited April with substantial income-supported purchasing power.

Net Savings

The chart above captures consumer saving patterns, including the COVID stimulus anomaly. Note that consumers saved a significant portion of their stimulus payments, greatly enhancing household net worth during the period. The rapid drawdown into mid-2022 reflects the impact of record inflation, which rapidly depleted spending capacity. Since then, consumer savings have returned to more normal levels around 5%. Changes in savings activity serve as a psychological barometer for economists. For example, while consumers received healthy income gains in April, they spent less of it than in previous months, boosting savings levels. This likely correlates with the slight downtick in net worth and the large uptick in uncertainty caused by “Liberation Day”. This could indicate more cautious consumer behavior ahead, even with resilient income flows, but not enough to drive the economy into recession.

Debt Service Capacity

Consumers have multiple sources to fund their spending. As discussed, net worth levels remain healthy, disposable income levels remain healthy, and savings levels fall well within the historic norms that support spending. If needed, consumers can also draw on mortgages, credit cards, and credit lines to fund their consumption. During the current cycle, elevated interest rate levels make this somewhat problematic with 7% mortgage rates and 25% credit card rates. Fortunately, because the government overfilled our net worth reservoirs, consumers have relied less on credit during this cycle than in previous cycles. Media commentary on credit card debt levels and defaults rings false alarms. As my father taught me, it’s not the size of the note that matters – it’s your ability to tote the note that matters. Currently, US consumers spend less on debt service today than they did pre-COVID, even with far higher interest rates. These levels reflect early economic cycle behavior rather than late economic cycle behavior.

Real Consumer Spending

Consumers spent 3% more in May of 2025 than they did in May of 2024. This pace continues the robust spending levels that powered the 2024 economy to a nearly 3% growth rate overall. I have added the long lookback on the chart above to highlight just how impressive post-COVID consumption trends have been. Despite the pandemic, massive supply chain disruptions, historic inflation, the most aggressive interest rate hikes in history, the war in Europe, the global tariff shock and now elevated conflict in the Middle East, the US consumer has continued spending with historic vigor, without depleting savings and without overusing. Should some exogenous shock trigger recession, the health of the US consumer would likely restrict its depth. Absent an exogenous shock, the health of the US consumer foretells continued health for the US economy.

Have a great weekend!

-David

Sources: US Bureau of Economic Analysis, Federal Reserve Bank of St. Louis

This communication and its contents are for informational and educational purposes only and should not be used as the sole basis for any investment decision. Waddell & Associates does not provide personalized investment advice through this communication. The information contained herein is based on publicly available sources believed to be reliable but is not a representation, expressed or implied, as to the accuracy, completeness, or correctness of said information. Past performance does not guarantee future results.
">As Goes the US Consumer…

Net Worth

Real Disposable Income

Net Savings

Debt Service Capacity

Real Consumer Spending

Have a great weekend!

-David

Sources: US Bureau of Economic Analysis, Federal Reserve Bank of St. Louis

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Before we discuss alternative investments, it’s worth noting an important shift in the investment landscape: public markets have contracted, and significantly so.

Research indicates that the number of publicly traded U.S. companies has roughly halved over the past two decades. This isn’t mere coincidence—it’s a fundamental shift in how businesses approach capital.

Companies are strategically choosing to remain private longer, which means their most dynamic growth phases often occur well before they ever appear on a public exchange. Some high-performing enterprises have no intention of going public at all.

For sophisticated investors, focusing exclusively on public markets means potentially missing an entire universe of opportunity.

This is precisely where alternative investments can play a significant role in a sophisticated portfolio. Beyond just private equity and debt, the alternatives ecosystem encompasses a diverse array of strategies—from hedge funds and venture capital to real assets like infrastructure, farmland, and commercial real estate.

I often describe alternatives as the essential “third leg of the stool.” When thoughtfully integrated, alternatives complement traditional public equities and fixed income to create a more structurally stable portfolio. This strategic advantage explains why alternatives have become a cornerstone for institutional investors like university endowments and sovereign wealth funds.

Yet, despite their compelling benefits, individual investors—even those with significant wealth—have been comparatively slower to incorporate alternatives into their wealth strategy. This presents both a challenge and an opportunity for families seeking to preserve and grow their wealth across generations.

Why consider alts?

Alternatives have some compelling advantages.

First, they can provide diversification through low correlation* with traditional investments. In other words, they don’t tend to move in lockstep with stocks or bonds. During periods of volatility, that can help smooth returns and reduce portfolio swings.

*Correlation, in this context, measures how investments move relative to each other. Assets with low or negative correlation don’t rise and fall together, which can help balance a portfolio.

Second, some alternative strategies have historically outpaced public markets. Private equity, for example, has outperformed the S&P 500 in different periods over the last 20 years.

Third, alternatives can provide exposure to innovative sectors and companies that are still in their early, high-growth years. Because companies today stay private longer, investors in private equity, venture capital, and other alternative strategies can access opportunities that aren’t available through the public markets alone.

Finally, alternatives can provide a psychological buffer during market volatility.

Unlike publicly traded investments, many alternatives are not priced daily. This lack of constant valuation can help investors stay focused on long-term goals rather than reacting to short-term market swings.

Nonetheless, alternatives remain surrounded by misconceptions that can prevent investors from leveraging these powerful tools.

Common misconceptions of alternative investments

Costs:

The first reaction I hear from clients exploring alternatives is sticker shock. Some alternative investments do carry higher fees—typically between 1% to 2% of assets under management plus a performance fee of 10% to 20% of profits.

However, this isn’t universally true. Mutual and exchange-traded funds that offer alternative strategies are typically prohibited from charging performance fees, although their expenses are higher than most other mutual funds and ETFs.

Transparency:

Transparency is another common concern. Unlike buying shares of Apple or Nvidia through a brokerage account, alternatives typically involve hiring managers to execute strategies through more complex structures. Managers usually disclose their investments quarterly, offering a limited view into their holdings.

Unrealistic expectations:

Some investors also have inflated expectations about alternatives based on stories they’ve heard, usually from a boastful relative around the Thanksgiving table. These anecdotes create misconceptions about the role alternatives should play in a sophisticated portfolio.

Are alternatives right for me? In what ways?

When we explore alternatives with you here at Waddell & Associates, we focus on how these assets might enhance your overall wealth strategy. This evaluation centers around several key dimensions:

Investment Time Horizon

Some alternative investments, like typical drawdown structure private equity, require commitments of 7-10 years or longer—an important consideration we explore in depth:

How does this timeline align with your wealth transition plans? Will these funds need to be accessible during a particular life season?

If you have multi-generational wealth objectives, longer-term alternative investments can serve as ideal vehicles for wealth earmarked for future generations.

Liquidity Strategy

We also examine a client’s comprehensive liquidity profile:

How might periodic or limited access to these funds affect your lifestyle needs and other financial objectives?

Rather than simply asking if clients are comfortable with illiquidity, we help visualize specific scenarios where limited access might impact plans, then develop strategies to address those potential situations.

Portfolio Integration

Alternatives should complement your existing investment approach, not dominate it. We consider:

How do these alternatives interact with your current holdings? What exposures are you seeking to enhance or minimize?

The W&A Approach

Remember, our conversations about alternatives are simply one aspect of our broader strategic partnership. As we explore these opportunities together, we’ll continue to place them in context with your complete wealth picture—ensuring any decisions align with both your long-term vision and near-term priorities.

New here? Learn about the Waddell & Associates difference and explore how you can work with us. We’d love to hear from you.

Matt Gentzkow is an Investment Strategist with Waddell & Associates

Sources: Commonfund.org, FSInvestments.com, Credit-Suisse.com

June 10, 2025

Before we discuss alternative investments, it’s worth noting an important shift in the investment landscape: public markets have contracted, and significantly so.

Research indicates that the number of publicly traded U.S. companies has roughly halved over the past two decades. This isn’t mere coincidence—it’s a fundamental shift in how businesses approach capital.

Companies are strategically choosing to remain private longer, which means their most dynamic growth phases often occur well before they ever appear on a public exchange. Some high-performing enterprises have no intention of going public at all.

For sophisticated investors, focusing exclusively on public markets means potentially missing an entire universe of opportunity.

This is precisely where alternative investments can play a significant role in a sophisticated portfolio. Beyond just private equity and debt, the alternatives ecosystem encompasses a diverse array of strategies—from hedge funds and venture capital to real assets like infrastructure, farmland, and commercial real estate.

I often describe alternatives as the essential “third leg of the stool.” When thoughtfully integrated, alternatives complement traditional public equities and fixed income to create a more structurally stable portfolio. This strategic advantage explains why alternatives have become a cornerstone for institutional investors like university endowments and sovereign wealth funds.

Yet, despite their compelling benefits, individual investors—even those with significant wealth—have been comparatively slower to incorporate alternatives into their wealth strategy. This presents both a challenge and an opportunity for families seeking to preserve and grow their wealth across generations.

Why consider alts?

Alternatives have some compelling advantages.

*Correlation, in this context, measures how investments move relative to each other. Assets with low or negative correlation don’t rise and fall together, which can help balance a portfolio.

Second, some alternative strategies have historically outpaced public markets. Private equity, for example, has outperformed the S&P 500 in different periods over the last 20 years.

Finally, alternatives can provide a psychological buffer during market volatility.

Nonetheless, alternatives remain surrounded by misconceptions that can prevent investors from leveraging these powerful tools.

Common misconceptions of alternative investments

Costs:

Transparency:

Unrealistic expectations:

Are alternatives right for me? In what ways?

When we explore alternatives with you here at Waddell & Associates, we focus on how these assets might enhance your overall wealth strategy. This evaluation centers around several key dimensions:

Investment Time Horizon

Some alternative investments, like typical drawdown structure private equity, require commitments of 7-10 years or longer—an important consideration we explore in depth:

How does this timeline align with your wealth transition plans? Will these funds need to be accessible during a particular life season?

If you have multi-generational wealth objectives, longer-term alternative investments can serve as ideal vehicles for wealth earmarked for future generations.

Liquidity Strategy

We also examine a client’s comprehensive liquidity profile:

How might periodic or limited access to these funds affect your lifestyle needs and other financial objectives?

Portfolio Integration

Alternatives should complement your existing investment approach, not dominate it. We consider:

How do these alternatives interact with your current holdings? What exposures are you seeking to enhance or minimize?

The W&A Approach

New here? Learn about the Waddell & Associates difference and explore how you can work with us. We’d love to hear from you.

Matt Gentzkow is an Investment Strategist with Waddell & Associates

Sources: Commonfund.org, FSInvestments.com, Credit-Suisse.com

">Beyond Stocks and Bonds: The Strategic Role of Alternative Investments Before we discuss alternative investments, it’s worth noting an important shift in the investment landscape: public markets have contracted, and significantly so.

For sophisticated investors, focusing exclusively on public markets means potentially missing an entire universe of opportunity.

Why consider alts?

Alternatives have some compelling advantages.

*Correlation, in this context, measures how investments move relative to each other. Assets with low or negative correlation don’t rise and fall together, which can help balance a portfolio.

Second, some alternative strategies have historically outpaced public markets. Private equity, for example, has outperformed the S&P 500 in different periods over the last 20 years.

Finally, alternatives can provide a psychological buffer during market volatility.

Nonetheless, alternatives remain surrounded by misconceptions that can prevent investors from leveraging these powerful tools.

Common misconceptions of alternative investments

Costs:

Transparency:

Unrealistic expectations:

Are alternatives right for me? In what ways?

When we explore alternatives with you here at Waddell & Associates, we focus on how these assets might enhance your overall wealth strategy. This evaluation centers around several key dimensions:

Investment Time Horizon

Some alternative investments, like typical drawdown structure private equity, require commitments of 7-10 years or longer—an important consideration we explore in depth:

How does this timeline align with your wealth transition plans? Will these funds need to be accessible during a particular life season?

If you have multi-generational wealth objectives, longer-term alternative investments can serve as ideal vehicles for wealth earmarked for future generations.

Liquidity Strategy

We also examine a client’s comprehensive liquidity profile:

How might periodic or limited access to these funds affect your lifestyle needs and other financial objectives?

Portfolio Integration

Alternatives should complement your existing investment approach, not dominate it. We consider:

How do these alternatives interact with your current holdings? What exposures are you seeking to enhance or minimize?

The W&A Approach

New here? Learn about the Waddell & Associates difference and explore how you can work with us. We’d love to hear from you.

Matt Gentzkow is an Investment Strategist with Waddell & Associates

Sources: Commonfund.org, FSInvestments.com, Credit-Suisse.com

" class="link-chevron"> Watch Now

This past week, I had a reporter ask me if the economy and markets had behaved differently than I expected under President Trump so far this year. I responded quickly with a surprisingly emphatic “no”. While his methods win no style points, his results largely align with his objectives. Given my surprisingly emphatic response, I took to the data to prove my impressions. Here is what I found:

Objective: Stop Illegal Immigration