A Year-End Letter to Clients: How the World’s Wealthiest Families Invest

January 20, 2015

by Dan Richards

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Since 2008, each quarter I have posted a template for a client letter as a starting point for advisors who want to send clients an overview of the period that just ended and some thoughts looking forward. Advisors tell me they get a great response to these letters – the year-end letters are especially popular.

Use as much of the content below as is appropriate for you, adding or deleting to reflect your views. Here are the components of the year end letter for 2014:

  1. An overview of 2014 performance
  2. Some context on market valuations and how wealthy families are investing today
  3. Brief thoughts  for the period ahead

A year-end letter to my clients

2014 in review – How the world’s wealthiest families invest

As we enter 2015, investors are faced with the classic good news/bad news scenario.

The good news:  Even in the face of significant volatility and a collapse in oil prices late in the year, 2014 saw another year of double-digit gains for U.S. stocks, taking markets to record levels.

The bad news: Given low interest rates and the run-up in stocks, it has seldom been harder to make a compelling case for attractive short-term valuations in any of the traditional alternatives of bonds, cash or stocks.

In this review of the past year, I point to a recent Wall Street Journal article on how some of the world’s most sophisticated investors, among them Warren Buffett, are responding to the current market environment and discuss the implications for my clients.

But first an overview of performance in 2014.

The U.S. has led the global recovery

Despite turbulence in the fourth quarter, last year saw the United States market post the third consecutive year of double-digit gains, building on the very positive returns of 2013.

Annual Returns in Local Currency U.S. Europe Emerging Markets World Markets
2012 16% 16% 17% 16%
2013 33% 22%            4% 26%
2014 13% 5% 6% 10%

Source: MSCI

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