Podcast Summary: How I Invest with David Weisburd

Episode 298: How Family Offices Think About Illiquidity, Taxes, and Compounding
Release Date: February 5, 2026

Episode Overview

In this episode, host David Weisburd speaks with Jeff (no last name provided), an experienced investor whose career spans roles at Guggenheim Partners, Hightower, and currently Alti Global (with $100B AUM). The conversation dives deep into how leading family offices and institutional investors navigate asset allocation, illiquidity, tax-aware strategies, and compounding. Key topics include the evolution of hedge fund opportunities post-Long Term Capital Management, the rise of tax loss harvesting in portfolio construction, nuances around private credit and fixed income markets, the democratization of alternative investments in vehicles like 401ks, and evergreen fund structures.

Key Discussion Points and Insights

1. Serendipitous Entry and Early Lessons in Finance

• Jeff’s Career Path: Started as a golf professional; entry into finance was chance, later joining the burgeoning fund-of-funds business at Signet Capital Management in the mid-2000s.
• Industry Context: Early 2000s was ripe for hedge fund opportunities following market disruptions.

“All the stars aligned and that kind of put me on my path to where I am today.” (C, 01:28)

2. Lessons from Long Term Capital Management (LTCM) Collapse

• Market Impact: LTCM’s implosion created dislocations, especially in relative value and merger arbitrage strategies.
• Strategic Shifts: Opened new opportunities for fund-of-funds and hedge strategies, as wide spreads and new inefficiencies appeared.

“Just they got ahead of what the market could sustain. And so, post the collapse of Long Term Capital Management, there were all these really interesting and compelling strategies.” (C, 02:42)

• Example: Merger arbitrage trades, where leverage and efficient market hypothesis led to dislocations that nimble hedge funds exploited.

3. Tax-Aware Strategies and Customization for Clients

• Market Evolution: Shift from pure alpha generation to after-tax optimization, especially among wealthy families and institutions.
• Mechanics: Use of 130/30 strategies (being 130% long, 30% short) to generate “synthetic losses,” aiding in tax loss harvesting even as most assets have gains.

“Now there’s very few investments that have losses in the portfolio… if you can now add basically a fully exposed portfolio by being 130 long and 130 short … that creates a really interesting opportunity for tax loss harvesting.” (C, 06:55)

• Scale and Growth: These strategies have exploded in popularity; e.g., “gone from something like $1 to $30 billion within 12 months.” (A, 09:43)
• Key Players: AQR, Quintina, plus increasing interest from quant hedge funds able to handle factor risk precisely.

4. Execution Nuances with Tax Loss Harvesting and Liquidity

• Trade unwinding: Gradual selling and rebalancing can realize losses over time, providing tax-efficient diversification (see detailed mechanics at C, 13:38).
• Timeline: Most models achieve near-total liquidity within 5-10 years, with little slippage if well managed.
• Investor Mindset: Many investors focus more on performance tracking error and less on the absolute savings from improved tax outcomes—a mindset the industry is working to change.

“I’m always amazed the things people care about and the things that they don’t care about when it comes to taxes.” (A, 16:33)

5. The State of Private Credit—Debunking “Bubble” Fears

• Perspective: Private credit is not in a bubble due to direct lending’s structure and strong underwriting.
• Attractive Segment: Credit secondaries—older loans at discounted prices, sometimes creating capital gains when GAAP accounting marks to NAV.

“The pocket of the market that we really love right now are credit secondaries … you’re getting an inherent spread uplift.” (C, 18:21)

• Market Dynamics: Many sellers due to liquidity pressures (“DPI problem”); deals often close at discounts, giving buyers a multi-quarter performance lookback.

6. Fixed Income ETFs vs. Private Credit

• ETF Appeal: Accessibility, simplicity for clients.
• Risks: ETFs may increase correlation with equities in stressed markets, reducing diversification benefits (“correlation risk”).

“If you get a sell off and that beta goes to 0.8, you’re not really getting diversification from your credit investment…” (C, 23:56)

• Private Credit Advantage: Less mark-to-market volatility, more intrinsic value tied to underlying credit performance—not public market swings.

7. Democratization and Innovation in Private Markets for Retirement Accounts

• 401k Access to Alternatives: New regulations will let 401k participants access private assets, mainly via target date funds.
• Implementation: Likely through mutual funds within target dates, and potential future product lines (“2060 Target Date Fund Star P”).

“Some of the rules haven’t even been written yet. We’ve been talking to some of the big players… it looks like there’s two avenues that this is going to go down initially.” (C, 25:46)

• Need for Education: Investors often don’t grasp illiquidity’s true impact; labeling of funds by target date could help set expectations.

8. Evergreen Fund Structures—Operational and Return Implications

• Benefits: Solve timing/capital call headaches, maintain target exposures, generally lower fees and more liquidity versus traditional PE/VC fund structures.

“In the evergreen structure. That’s all handled for you on the back end.” (C, 33:18)

• Risks: Quality and alignment of interest depend on the manager’s integrity and operational practices—no substitute for GP trust.

9. Current Trends and Outlook in Private Equity, Buyout, and Venture

• Buyouts: Not as dire as headlines suggest; “continuation vehicles” allow access to high-quality, seasoned assets, often at discounts.
• AI & Platform Shifts: Top buyout managers now add value by rolling out AI, echoing the digital/cloud transformations of the 2010s.

“The best buyout managers during that period were groups that were really at the forefront of moving their companies into cloud and getting an edge… The value add on the AI side is another area.” (C, 38:04)

• Growth Equity: Focus on “private magnificent 15”—private companies with scale, quality, and scarcity value.

10. Career and Investment Philosophy—Advice and Mindset

• Key Lesson: Be bold in seizing turbulent, transitional market opportunities; don’t become overcautious as you gain experience.

“Sometimes you can actually over learn and you become too conservative and you almost lose that beginner’s mind or that kind of like, overly optimistic mind that could sometimes actually be… a better way of looking at opportunities…” (A, 41:56)

• Curiosity Wins: Everyone’s learning in new markets—curiosity and willingness to lean in are differentiating factors.

Notable Quotes & Memorable Moments

• On the evolution of investment focus:
  “If I had gone back in my career 10 years, we were just hyper focused on how much alpha we could create in client portfolios independent of the tax consequences… Now there’s definitely a much more focused awareness on tax situations and what you’re delivering after-tax.” (C, 17:10)

• On private credit secondaries:
  “We’ve just seen a really good opportunity to buy quality loans at a discount … based on how GAAP accounting rules work … we then mark up the holding of that investment.” (C, 19:32)

• On ETF risks:
  “The worry there is if you get a selloff and that beta goes to 0.8, you’re not really getting diversification.” (C, 23:56)

• On evergreen funds:
  “It’s very hard to align your distributions since you have no idea when they’re coming… we’re seeing groups wanting to use these evergreen structures to ensure that they’re maintaining the exposure that they want…” (C, 34:19)

• On lessons for emerging investors:
  “It’s really pushing in harder on these pockets of opportunity that arise over your career.” (C, 40:49)

Important Timestamps

• 00:16 - Jeff’s entry into finance and early fund-of-funds experience
• 02:02 - Lessons from LTCM and evolution of hedge fund opportunity
• 05:55 - Modern tax-aware investment strategies and 130/30 structures
• 09:43 - Scale and adoption rates for tax loss harvesting strategies
• 13:14 - Nuances: unwinding positions in tax loss harvesting
• 17:54 - Private credit is not a bubble; focus on credit secondaries
• 21:57 - ETFs in fixed income and impact on asset allocation
• 25:46 - 401k market evolution: privates in retirement accounts
• 30:06 - Best asset classes for evergreen funds
• 33:13 - Client movement from traditional funds to evergreen structures
• 36:06 - State of private equity, buyouts, venture, and growth equity
• 40:49 - Advice to younger self: boldness in taking emerging opportunities

Conclusion

This episode offers an in-depth tour of how sophisticated investors think about taxes, liquidity, and portfolio construction, and how product innovation is reshaping access to alternative investments. Jeff’s candid insights illuminate not only market mechanics but also the psychological and operational complexities faced by family offices and institutional allocators. The tone remains thoughtful, pragmatic, and educational throughout.