Matthew Zuckerman, president of Zuckerman Management Associates Inc., the fund investment advisor, was always led to believe that a consistent plan of investment over a long period of time would result in the building of a considerable estate.
wife had a similar background, and with this mutual mindset, as each of their grandchildren were born, they would establish a trust for the new child.They funded each trust with a gift of ten thousand dollars, and over the next several years continued to add to each trust to the total amount of between $15,000 to $25,000.The funds were then invested in common stocks, and as funds became available within the trusts from dividends, the income was invested in more shares.
As time passed, the investments created fourteen different portfolios (one for each grandchild), with the older children obviously having more in their accounts than the younger children.However, as the time continued and the portfolios grew, Mr. Zuckerman
began to see an element of inequity within the portfolios that he
did not want.Not only did the older children have more in their portfolios, (that was simply a function of their age), but the inequity was that the rate of growth in the portfolios of the older children was greater than the rate of growth in the portfolios of the younger children, and growing.
The solution to Mr. Zuckerman's
problem was to combine the fourteen portfolios into one, giving each grandchild participation in the combined fund proportional to each one's contribution to the combined fund.