EFTA01454215.pdf

Asset Allocation Advantage Compare a privateplacement portfolio that's diversified and one with only asset classesfor the highest tax exemption multiples (TEMs) Asset Location Stategy Dilletence in Futile Values (S) Yen S 10 IdennailAketion nPnetePiawent 1936.68174 5.4973656 11.344.4822 20292.400 AssetNueva Wit TEM in ribytePixement 1904.459.*, 1232233501 30)69173J 62%01519 ASSUITTOCITS. • Itttle 171Caplal gags lax ci tot VC,: cupw gauf tan cl (9%. ace in:or:etas kw 'ate> :enan • AS52I elms (teemand Istnew assucitAcns Into] n Class Assail:66(6as] Tax Cvteral Benda; a. 11 • An nitil Wise al 160 rata% ?A in a viral° olmelnern ble insuwnee (RAI)Ctettic rid /A in a wade mita°. • Assets are 'x telmaied [Hawn theKil and iamb% po4s ever the intal asset Axiom • letal awl allxition: US. live (ac Secar 70.25%. US SratetapEoutly18%. Etoopean runty IC.BA.spanese Wady 2.17). Paoli( X-/ftin Sealy 225%. Eirevsa casy S.86%.74.1w(crekrilstRunopels1/49%, H4e.Yeld 8445 la imager; Nalcel 84451.7%.1rosune tntlation litcteteU Steutoes LE'S. Me4. re oral wee fan.% SA%. Diagonal Hedge limas 3.6%. Rwie (elute 4%. Real (stale %%reamer( arts 6%. (tatne4to. la dila (»lila — Deutsche Asset k Wealth Management carrier's platform. location strategies, each of which has its own advantages A disadvantage is that the advisor would have to get and disadvantages. the IDF added to the carrier's platform. In addition, the As with all investments, execution is key. We shown administrative costs of the custom 1DF usually make this several ways tobuildand execute an optimal private place- approach feasible only at levels over $20 million. And, if ment portfolio. In all cases, it's essential that an investor the investor elects to allow others to invest in his IDF, it partner with an advisor with specific expertise in private could limit his ability to change the mandate. placement structures, asset location and proven invest- As with any discussion of private placement, we ment acumen to ensure that the portfolio is constructed should pause to consider the investor control doctrine. with the goal ofachieving the maximum future value. While an investor can design the broad allocation. select specific asset classes or themes for focus and —This article is meant to serve as an overview, and is even hire a specific manager, the investor should be providedfor informational purposes only. It does not take certain not to participate (directly or indirectly) in into consideration the recipient's specific circumstance security selection. and is not intended to be an offer or solicitation. or the basis for any contract to purchase or sell any security, or Bottom Line other instrument or service. or for Deutsche Bank Trust It's broadly accepted in the wealth management and Company Americas ("DBTCA, to enter into or arrange financial planning communities that certain asset class- any type of transaction as a consequence ofany informa- es offer a greater benefit from the tax deferral or tion contained herein. Deutsche Bank does not provide tax-exemption features of private placement insurance tax, legal or accounting advice. vehicles. We've explored how best to measure the rela- tive long-term tax deferral benefit of various asset classes Endnotes and, in the process, have debunked some broadly held 1 See eg, Edward FieleY and Michael litheskind, ' Pivate Matement Vari- misconceptions. atle Amities.' lfusls & Estates (December 20121. atoll Hie (ohn and The TDM or TEM, is perhaps the best measure of Edikaid 1. Finey It 'An ktedors Guile to Wen (ash Value Life Insurance' tax deferral benefit. It incorporates return, turnover and Tracts & Estates (knuay 2014), at p14 the compounding effect of tax deferral when comparing 2. RE a Awn/chile general tiegnpwft see Ckeed. "(Chaim Asset Alloca. asset classes. It can be used to execute a variety of asset inn Between Tax-Detene4lac-bempt and %fable Accounts." Aug. 28.2013 24 TRUSTS & ESTATES t (int SandeStateS.COM JUNE 2014 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SONY-0112199 CONFIDENTIAL SDNY_GM_00258383 EFTA01454215