Private Investment Proposal
Prepared for
The Hartwell Family
A purpose-built plan for $15,000,000 — structured around your growth mandate and a 20-year horizon.
The situation
A plan written for your circumstances
A multi-generational New York family with $15M across a taxable account and a 2019 family trust. The defining feature is a $4.0M low-basis NVDA position (~27% of assets) carrying roughly $3.7M of embedded long-term gain. They are highly gain-sensitive, want broad diversification and access to alternatives, and intend to preserve wealth for the next generation. Top federal bracket with NIIT and a high New York state rate make every realized dollar expensive — argues for an overlay on the concentrated stock and a multi-year, budgeted transition rather than a forced liquidation.
Total plan
$15M
Embedded gain today
$6.4M
Transition tax
$733.7K
over 2 yrs
Rhea's read on the existing portfolio
Imbalanced today
58
Balance score
As it stands today, the portfolio is imbalanced — its risk is driven by a single 26.7% position rather than a deliberate allocation. NVDA alone accounts for 26.7% of assets, so the overall return — and the downside — is effectively a bet on one company. Against the target model, the largest gap is in Equity (23.9% off model). The constraint on fixing it is tax: there is $6.4M of embedded gain in the book, so the path to balance has to be sequenced and budgeted rather than executed in a single rebalance.
Allocation vs. target model
Bar = current weight · vertical line = target weight
Single-position concentration
NVDA is 26.7% of the portfolio ($4M), carrying $3.7M of embedded gain. A position this size dominates total risk and cannot be unwound quickly without a large tax bill.
Equity overweight
Equities sit at 68.9% versus a 45.0% target — 23.9% above model. The book is tilted toward growth and market beta.
Thin diversifiers
Fixed income and alternatives together are only 14.7% of assets, leaving little to cushion an equity drawdown relative to the 45.0% the target model carries in bonds and alts.
Considerations as we move
- Hedge before you diversify: collar or VPF the NVDA position so a market drawdown during the transition can't undo the plan, then unwind the gain on a budget rather than all at once.
- Reaching the target allocation means realizing part of $6.4M in embedded gains — roughly $2.3M if sold outright. Phase the moves against an annual gain budget and harvest losses first.
- Trim the equity overweight into the underfilled fixed-income and alternatives sleeves, prioritizing the highest-basis lots to keep the tax cost of rebalancing down.
- Stand up the 8.0% liquidity reserve before deploying into longer-horizon or illiquid sleeves, so transition timing is never forced by a cash need.
I compared the current allocation to the balanced target model to find the largest drifts, measured single-name concentration and its embedded gain, estimated income yield and fee drag, then scored overall balance — weighting concentration most heavily because it dominates risk. The "considerations" translate each finding into a tax-aware move for the transition.
The structure
How your capital is organized
The reasoning
Why each piece is here
Liquidity
— Laddered U.S. Treasury Bills (3–24mo)A 8% reserve in a state-tax-exempt Treasury ladder covers near-term spending and provides dry powder without market risk.
Income
— Allspring Core Plus Fixed IncomeA diversified income model with a measured covered-call overlay targets durable cash flow while keeping volatility contained.
Growth
— Aris Tax-Managed U.S. Core EquityA direct-indexed global equity core (risk tier 6/10) provides ongoing tax-loss harvesting, paired with a 25% alternatives sleeve sized to the client's 25% illiquidity capacity.
Concentrated Position
— Protective Collar / VPF OverlayNVDA, SPY represents a large low-basis position. A zero-cost collar hedges downside and defers the embedded gain instead of triggering a forced, fully-taxable sale.
Legacy
— AB Concentrated Intl GrowthAssets earmarked for the next generation can accept illiquidity and volatility in exchange for higher expected return, and benefit from a step-up in basis at death.
Market conditions overlay · as of June 2026
Reading today's backdrop through this portfolio
Regime: Elevated rates · concentrated, richly-valued equities · tight credit
The plan is being implemented into a backdrop of still-elevated front-end yields, rich and concentrated equity valuations, and tight credit spreads. For a portfolio anchored by a 26.7% NVDA position, the market's own mega-cap concentration is the dominant risk — reinforcing the case to hedge first, then diversify on a tax budget. Cheap volatility makes this an opportune moment to put downside protection and overlays in place. These are conditions to act on, not forecasts — the transition is sequenced to be resilient across regimes rather than timed to this one.
Policy & front-end rates
Cash and T-bills still yield near cycle highs, with the curve normalizing as the easing path stays gradual.
Implication: Funding the liquidity reserve with a Treasury ladder locks in attractive front-end yield before it erodes.
Equity valuations & concentration
Index-level multiples are rich and historically concentrated in a handful of mega-cap names.
Implication: This is the central issue for this portfolio: the 26.7% NVDA stake compounds the market's own concentration, so a rotation away from mega-cap leadership would hit twice. It argues for hedging the position before broadening out.
Credit spreads
Investment-grade and high-yield spreads are tight, offering limited compensation for taking credit risk.
Implication: Lean the income sleeve toward high-quality duration and municipals rather than reaching into high-yield for incremental spread that is poorly paid today.
Volatility & hedging cost
Realized volatility is low and option premia are reasonable, making downside protection comparatively cheap.
Implication: Favorable pricing to collar the NVDA position now — defining downside cheaply while the budgeted, multi-year unwind runs.
I mapped the current market backdrop (rates, equity valuations and concentration, credit spreads, volatility) onto this specific portfolio — weighting whichever factors the holdings are most exposed to — and translated each into an implementation implication rather than a market call.
Getting there
A tax-aware transition
Rather than liquidating everything at once, the move to this structure is phased across 2 years to respect a $1,500,000 annual realized-gain budget. Losses are harvested first, and concentrated low-basis positions are hedged rather than sold — keeping the total transition tax to approximately $733,730.
Repositioned
$9.3M
Hedged via overlay
$5.7M
Held / deferred
$0
Pending advisor approval
Rhea drafted this proposal; a human advisor reviewed and signed off on 0 of its sections. Investment recommendations are illustrative and subject to the disclosures below.
Important disclosures. This proposal is for informational purposes only and does not constitute tax, legal, or investment advice. Tax figures are illustrative estimates based on stated top marginal rates (federal long-term capital gains, NIIT, and an assumed state rate) and do not reflect your complete tax situation. Cost-basis and acquisition-date values may be estimated where source data was incomplete. Alternative investments and derivative overlays carry additional risks and eligibility requirements. Past performance does not guarantee future results. Consult your tax and legal advisors before implementation.