Episode summary
Why This Billionaire Family Office Doesn't Rebalance Its Portfolio
How I Invest With David Weisburd
· · 49 min · Hosts: David Weisburd · Guests: Scott Abookire
Summary
Scott Abookire argues that taxable investors are often measuring the wrong thing when they focus on pre-tax performance instead of what ultimately compounds after taxes. He says the problem is both practical and structural: private equity, pooled vehicles, trusts, and different jurisdictions make true after-tax reporting difficult, so many managers default to easier pre-tax metrics. At Pincus Capital Management, the result is a more labor-intensive reporting process that tries to tie out actual dollars, fees, taxes, and spending over long periods.
His broader portfolio framework rejects the traditional endowment habit of rigid strategic asset allocation and automatic rebalancing. Instead, Scott organizes exposures into growth, diversifiers, and deflation hedging, then manages around two constraints: a dollar-based drawdown threshold and liquidity needed for future private commitments. He says the right benchmark is tied to liabilities, not arbitrary targets, because a family’s needs can change as assets rise. That lets the portfolio take more risk when it can, while avoiding unnecessary tax drag and forced selling.
Scott also emphasizes pacing, manager selection, and relationship compounding. He describes staying disciplined during 2020-2022 by favoring long-term compounding over short-term opportunistic trades, and he says the best family offices combine strong governance with the ability to say no quickly. In his view, the edge comes from duration, trust, and the willingness to be selective about where time and capital are spent.
Key takeaways
- Scott Abookire says after-tax returns matter more than headline performance because taxes can consume 20% to 30% of long-term gains.
- Pincus Capital Management has moved away from fixed endowment-style rebalancing and instead adjusts risk based on liabilities and portfolio value.
- Scott says a drawdown threshold is more useful than volatility because families understand dollars lost, not standard deviation.
- He argues private credit can offer too little after-tax yield for the extra illiquidity and risk taxable families take on.
- Scott says the best family offices combine strong governance, pacing discipline, and long-duration relationships with managers.
Notable quotes
“It's really hard to calculate, genuinely difficult to calculate after-tax returns”
“we really the way we refer to asset classes is very simplified. It's just growth, diversifiers, and deflation hedging”
“I think private credit it for a lot of families it for the general taxable pool of capital we think in most periods”
How the episode opens
In today's conversation, we explore why most investors measure performance incorrectly, why Scott moved away from the traditional endowment model, and how sophisticated families think about portfolio construction, risk, and preserving wealth across generations. Joining me is Scott Abu Khair, CIO of Pinkus Capital Management, where he helps oversee the wealth of the Pinkus family and thinks deeply about maximizing after-tax returns for long-term investors. Without further ado, here's my conversation with Scott.
Scott, one of the ideas that you've really spent a lot of time thinking about is after-tax returns. Why is nobody focused on it?
It's really hard to calculate, genuinely difficult to calculate after-tax returns. We can get into the structure of our operation a little bit, but just like maybe one way that a lot of sort of larger single-family or multi-family offices might differ from your traditional wealth client is just the complexity of like entities. You have individuals, entities, sometimes pooled vehicles that are created, all of which kind of have different nuances in how they're taxed.
Some income from a fund might flow from a fund to a pooled vehicle, to a trust, and then the certain types of income might stay there and get taxes get paid on behalf of the trust. Certain income goes down to the an individual. These entities all can be in different jurisdictions.
How do you attribute income tax liability sort of appropriately to the right place in the right investment to actually do the right analyses? There's a whole bunch of reasons. It's just genuinely difficult.
There's like timing issues. Oftentimes you've probably experienced this. Your accountant might call you around April to do like an extension thing, and and you've got to make it the same time you're trying to chewing up your prior years' tax liability, you're making a first quarter payment, and that might be sort of framed as like a lump sum.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- after-tax returns
- family office portfolio construction
- endowment model
- drawdown management
- private equity capital calls
Companies and tickers mentioned
- Pincus Capital
- Metropolitan Museum of Art
- Cambridge Associates
Watch the episode
Watch “Why This Billionaire Family Office Doesn't Rebalance Its Portfolio” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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