Why does Omaha Advisors utilize separate account managers?
Omaha Advisors strongly believes in managed accounts for various reasons. Separate account managers can meet very specific objectives. For example, one advantage of a managed account is it allows the investor to “tax harvest.” Tax harvesting can help offset capital gains thus improving the portfolio’s tax efficiency. In addition, managed accounts allow the investor to use a narrow investment focus. Private account managers are not required to follow the diversification laws of mutual funds. The average mutual fund, according to MorningStar, contains 155 total stocks; therefore, a diversified portfolio of only mutual funds can dilute returns. Separately managed accounts, on the other hand, allow for a narrow focus, thus giving more opportunity for a pure return. Warren Buffett has stated, “Wide diversification is only required when investors do not understand what they are doing.” Many investors are too diversified and as a result realize below average returns.
