67 percent remains
An annual cost of half a percentage point leaves about 67 percent of terminal wealth after eighty years. One percent leaves about 45 percent. Two percent leaves about 20 percent.
The Portfolio at a Glance
The following overview summarizes the strategic building blocks, position directions, and allocated assets for this research theme.
Long
World index
Two sponsors, one all-cap world index. US persons use the US ETF. Everyone else uses Irish UCITS.
Long
Small cheap stocks
Small, profitable and cheap stocks are the part of the market that patient large capital avoids.
Long
Holding companies
They receive directed dividends. As return engines, they add only hundredths of a percentage point to the portfolio.
Long
Reserve and gold
The portfolio holds gold in two custody arrangements and a reserve in short-dated government bonds. Only the reserve may be drawn.
Short
Separate short positions
Short positions only where they can never force a sale of the core. Gross notional at most 5 to 8 percent, in a separate entity.
The analysis
An investor can hold a global equity portfolio for thirty years, and preferably for eighty. The return comes from uninterrupted ownership of the businesses. Picking the winners of 2070 is secondary to that.
The UBS yearbook puts the world equity premium over bills at about 4.2 percent a year since 1900.4 The MSCI ACWI traded at 20.7 times trailing earnings on 22 October 2026.1 The S&P 500 stood at 23.5 times on 16 October 2026.2
Both multiples carry uncertainty of about ten percent because loss-makers are often excluded and the earnings base is not uniform. The earnings yield that follows is about 4.8 percent. The dividend yield is 1.7 to 2 percent.
On 21 October 2026 the United States was 64.6 percent of the MSCI ACWI, and information technology was 31.8 percent.3 The ten largest holdings together accounted for 25.4 percent. The starting point is therefore concentrated in the businesses investing the most.
A 25 to 30 percent cut in the multiple costs about one percentage point a year over thirty years. Over eighty years it is about 0.4 percentage points a year, while the terminal shortfall is unchanged. This analysis works with a real return of 2.0 to 3.5 percent a year through 2056, and 2.6 to 3.6 percent over eighty years.
The building blocks are a dividend of 1.8 percent and real per-share earnings growth of 1.5 to 2.5 percent. The annual drift in the multiple costs 0.5 to 1 percentage point. Costs and unrecoverable withholding tax together are about 0.3 percentage points.
Sales are triggered by legal compulsion, an unavoidable corporate action or the failure of a sponsor or wrapper. It is also allowed when the tax on holding exceeds distributions, or when a sanction freezes the holding. Valuation, the business cycle and technology are not reasons.
The thesis
The tax on holding decides whether holding indefinitely is financially viable
Accumulation is not tax deferral. In several tax jurisdictions, undistributed returns are taxed anyway.7 Cash then has to cover the tax, or the core is sold.
A Dutch bill would impose a 36 percent tax from 2028 on the actual return, including unrealised gains. The lower house approved the bill in February 2026. The Senate had not yet approved the bill in early October 2026.8
In the illustration, 36 percent meets a nominal return of 7 percent. That is about 2.5 percent of assets a year. A dividend of 1.8 percent leaves a gap of about 0.7 percentage points.
Tax on holding, and the cash it requires
The table shows whether the tax falls due without a sale. The Dutch model is a bill, not law in force.8
| Residence | Mechanism | Effect on cash | Consequence for the portfolio |
|---|---|---|---|
| Netherlands | A bill from 2028: 36 percent of the actual return, including unrealised gains. | At a 7 percent nominal return, about 2.5 percent of assets a year, against a dividend of about 1.8 percent. | The gap of about 0.7 points comes from other income or from the reserve. |
| Germany | Accumulating funds are subject to the Vorabpauschale. It is calculated from the basis rate, capped by the rise in price and credited later. | Part of the tax is deferred. It is not waived. | The accumulating VWCE.DE can be the fitting class for German residents. |
| United Kingdom and Switzerland | The UK taxes reportable income even without a distribution. Switzerland taxes reinvested income each year and levies a cantonal wealth tax. | The tax falls due even when no dividend is paid out. | The distributing class is the better fit when the tax is due either way. |
| Ireland and Denmark | Ireland deems a disposal after eight years, at 38 percent from 2026. Denmark taxes listed ETFs each year at 27 or 42 percent. | The tax recurs on a fixed timetable, even without a sale by the holder. | The reserve has to meet those dates, or the core is touched. |
| United States, Singapore, Hong Kong, UAE | In the United States, deferral lasts until the basis is reset at death. Singapore, Hong Kong and the UAE levy no capital-gains tax that deferral could postpone. | Sitting still creates no annual tax outflow there. | The rule is then a rule of behaviour. Cash does not decide it. |
Where the tax on accumulated and distributed income is the same, the distributing class is the fitting one. In Germany the Vorabpauschale can defer part of the tax, so VWCE.DE is the class to consider. The ability to pay binds the portfolio before stock selection does.
The index admits future winners while they are still small
Future winners enter the portfolio through the index. They do not have to be guessed in 2026.
Between 1990 and 2020 about 55 percent of US stocks and 57 percent of other stocks lagged one-month Treasury bills.5 For delistings with no recoverable value, the study assumed a loss of 30 percent. A frozen basket of today’s large companies would capture that skew poorly.
An all-cap index admits future businesses while they are still small. An index of large and mid-sized companies waits until the market value is already high. FTSE Global All Cap and MSCI ACWI IMI therefore come before the standard ACWI.
In 1989, six of the world’s ten largest companies were Japanese. In 1999, none of the ten largest was Japanese.6 A world basket frozen then would have left investors with a Japan-heavy portfolio.
The Voya Corporate Leaders Trust of 1935 does not buy or sell at discretion. Its composition changes through mergers, spin-offs and bankruptcies. Since 1970 the annualised return has been about 11.2 percent, against about 10.5 percent for the S&P 500.9
Three popular hedges end in a forced sale
Daily leveraged products
A short product that resets every day suffers path-dependent losses, even when the index goes sideways. The reset leaves the holder short two to three times the equity premium. Over decades that is a slow sale of the core.
Futures with daily margin
Treasury futures demand a cash settlement every day. A rise in yields pulls collateral from the account even when the economic bet later pays. That payment must not come from the equity core.
A small short
A small notional caps the gain on the hedge. It does not cap the loss while the price keeps rising and margin falls due. Size is no substitute for a separate entity with its own collateral.
Whether an investor can keep holding depends on law, heirs and custody
In the United States, deferral lasts until death, and the cost basis is then reset. Proposals to tax unrealised gains each year were not law in October 2026. US persons hold US ETFs, because foreign funds can be taxed as PFICs.
In this design, investors outside the United States hold Irish UCITS. Direct US holdings, including Berkshire, stay under the estate-tax threshold of roughly 60,000 US dollars or sit inside a wrapper. Inside the Irish fund, US withholding tax is 15 percent.
At a dividend yield of 2 percent and a United States weight of 64.6 percent, 15 percent unrecoverable US withholding costs about 0.2 percentage points of assets a year. In India the shares themselves pass to the state fund if no dividend is claimed for seven years.18 Claiming a dividend at least once in every seven-year period prevents that.
In 2024 and 2025 Saba built stakes of 19 to 29 percent in seven UK trusts. The votes failed, and two trusts still moved toward winding up. European Smaller Companies offered a tender for 42 percent of the shares.17
Two sponsors and two custody chains diversify the plumbing, not the political risk. A fund liquidation can be a taxable sale even when the holder never sells. A cross-border merger can count as a sale in Europe as well.
Norway shows how a wealth tax of about 1.1 percent and a tighter exit tax move capital. In 2022 and 2023 emigrants transferred deferred income of 142 billion Norwegian kroner.16 An annual wealth tax erodes a portfolio even without a sale.
From April 2027, UK pensions will be brought within inheritance tax. Canada deems a sale at death, with a 50 percent inclusion rate after the 2025 reversal. In Japan inheritance tax reaches 55 percent, and heirs generally take the decedent’s cost basis.
This design allows three forms of short position, each in its own entity. Gross notional is capped at 5 to 8 percent of assets. Net exposure stays long.
The semiconductor short may not exceed half the core’s look-through semiconductor weight. The short on the seven large platforms stays at most 30 percent of their look-through weight. QYLD at 2 to 4 percent and an IPO basket up to 1 percent remain insurance.
Without margin, the remaining tools are omitting chronic diluters and using the personal right to prepay, in Germany under section 489 of the civil code. Recalls of borrowed shares and discretionary margin can force a buy-in.14
A discount works only when capital comes back
The extra return appears when the company returns capital to its owners. It is the sum of distributions and buybacks, multiplied by the discount and divided by one minus the discount. Costs come off that.
At Exor, a return of 1 to 2 percent produces about 0.7 to 1.4 percentage points before costs. At Prosus it is about 1.5 points if roughly 3 percent of net asset value is bought back. The discounts on Investor, Exor and Prosus come from a specialist source, not from an audited account.10
A 2 percent weight with 1 percent of extra return moves the whole portfolio by 0.02 percentage points a year. The companies receive directed dividends and new capital. The core remains a global index in two wrappers.
US persons hold 55 to 65 percent in VT. Investors outside the United States split the core between VWRL.L and SPYI.DE, with a different custodian. Purchases run over six to eighteen months, and after that there is no discretionary sale.
What a constant discount adds to the return
The extra return equals the payout multiplied by the discount and divided by one minus the discount. The figures for Investor, Exor and Prosus are specialist figures for 2026.10
| Company | Discount | Capital returned | Extra return before costs |
|---|---|---|---|
| Investor AB | About 10 percent, range 5 to 15 percent, specialist source. | A small return of capital, costs about 0.1 percent. | About 0.1 to 0.2 percentage points, close to net asset value. |
| Exor | About 40 to 42 percent, specialist source. | 1 to 2 percent of net asset value. | About 0.7 to 1.4 percentage points. |
| Prosus | About 33 percent, specialist source. | About 3 percent of net asset value, funded from Tencent. | About 1.5 percentage points. The measure is the Tencent holding per remaining share. |
| Scottish Mortgage | 9.5 percent at 31 March 2026 and 8.8 percent at 30 June 2026, from the company’s report. | A buyback rate as a share of net asset value is not stated here. | The discount alone is not a return engine. Its role comes from the unlisted holdings. |
Scottish Mortgage reports a discount of 9.5 percent at 31 March 2026 and 8.8 percent at 30 June 2026.11 This calculation does not have a buyback rate as a share of net asset value. The discount alone is not a return engine there.
Together these companies stay at 12 to 16 percent of assets. A current discount on Sofina is not established in the evidence.
Patient years under tax and a lower valuation multiple
This estimate assumes that the global multiple declines from 20.7 to 16–19 by 2036–2046. Spread over twenty to thirty years, that is about minus 0.5 to minus 1 percentage point a year, and the decline is already in the building blocks. For the United States the path runs from 23.5 to 18–22.
The same assumption takes developed markets outside the United States from a derived 16–17 down to 14–16. Japan stays in a range of 14 to 17, India above 20, and other emerging markets at 11 to 14. No defensible aggregate free-cash-flow yield after maintenance capital expenditure is available for the ACWI.
In the United States, lower interest rates explained 19 percent and lower corporate tax rates 22 percent of real profit growth from 1989 to 2019. Together that is 41 percent. The effective tax rate of non-financial S&P 500 companies fell from 34 percent in 1989 to 15 percent in 2019.13
Railway shares fell 65 percent from the 1845 peak. The return on capital employed fell from 5.48 percent in 1845 to 3.31 percent in 1850.12 Users kept the surplus. The owners of the track did not.
The path breaks if AI earns high cash returns on little extra capital and the global multiple holds at 20 to 24. Following central-bank purchases, gold’s expected real return from here is near zero. QYLD erodes net asset value because the distribution exceeds the option premium collected.
The portfolio
Each position has a role, a weight, and either a rule or the condition under which it is wrong. Funds without an equity analysis have no Leeway ratings.
The investment thesis and the Leeway ratings are independent of each other. A high Business rating is not an instruction to break the no-sale rule. Check the shares on this page in the individual analysis.
The Business-Rating scores the quality of the business model, independent of the share price. The Market-Fit-Rating tests eighteen fundamental figures for how well the company currently fits the market; a negative reading implies expected negative performance. The Cycle-Rating places the valuation in the stock’s own history: a higher figure means the shares are historically cheaper. The Leeway-Score combines the three in equal parts. How the ratings are calculated
The recommendations since publication
The historical performance series for this portfolio is currently unavailable.
World index
LongTwo sponsors, one all-cap world index. US persons use the US ETF. Everyone else uses Irish UCITS.
Vanguard Total World Stock ETF
Long
Role: Core for US persons, 55 to 65 percent of assets.
Why this position: A US ETF on the world equity market, preferably in accounts where the cost basis is reset at death.
What would invalidate it: The position is wrong if a rule forces you to sell the core.
Position and what to watch
Position: Hold 55 to 65 percent in VT, preferably in accounts with a basis reset at death.
What to watch: Watch that distributions and the reserve cover the tax on holding.
Caveat: For anyone outside the United States the wrapper is the wrong one, because of PFIC rules and estate tax.
Vanguard FTSE All-World UCITS ETF (Distributing)
Long
Role: First sponsor for investors outside the United States, 30 to 35 percent.
Why this position: The distributing class of the FTSE All-World, where the residence taxes accumulated income.
Rule: Use the distributing class while the residence does not treat accumulated income more lightly than distributions.
Position and what to watch
Position: Build 30 to 35 percent over six to eighteen months, and do not sell at discretion after that.
What to watch: Watch the tax status of the share class in your residence.
Caveat: German residents should look at the accumulating VWCE.DE, because the Vorabpauschale defers part of the tax. VWCE is not a separate card here.
SPDR MSCI ACWI IMI UCITS ETF (Acc)
Long
Role: Second sponsor, 25 to 30 percent, with a different custodian.
Why this position: MSCI ACWI IMI includes small companies that an index of large companies admits only later.
What would invalidate it: The separation is wrong if both chains fail at the same time.
Position and what to watch
Position: Hold 25 to 30 percent with a custodian other than the one holding the first fund.
What to watch: Watch whether both funds use the same sub-custody.
Caveat: The accumulating class fits only where deferral is real. Otherwise use the distributing alternative, IMID.
Your knowledge edge
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Three scenarios for a portfolio that remains invested
| Path | Weight | What happens |
|---|---|---|
| Ownership and a high return on capital stay intact | 22% | Ownership, the basis reset at death and custody remain intact. AI earns high cash returns on little extra capital, and the global multiple holds at 20 to 24. In real terms that is 5 to 6.5 percent a year, about 4.3 to 6.6 times over thirty years and about 50 to 150 times over eighty. |
| Taxed patience | 53% | The tax on holding remains payable, and the multiple declines over the years. In real terms that is 2.0 to 3.5 percent through 2056, about 1.8 to 2.8 times. Over eighty years, 2.6 to 3.6 percent real is about eight to seventeen times. |
| The rule breaks | 25% | Confiscation, a tax that forces the core, or abandonment of the rule ends the sitting. Real returns stay at 0 to 2 percent. An uncovered short inside the same legal entity would have made ruin likely. |
Counter-arguments and Risks
The strongest objection is a single global all-cap index fund, with no satellites and no shorts. Even after allowing for human error, it is likely to match or beat this design. Every overlay is a bet against the index, and it costs the equity premium of the best businesses.
In residences that tax accumulated income as it arises, deferral is already gone. What remains is the rule of behaviour. Systematic put buying has reduced terminal wealth in the strategies that have been studied. The precise rule of 0.5 percent of assets in twelve-month options 20 percent out of the money is not documented in that source.15
Unresolved Market Factors
Four questions stay open. Only a handover between generations will show whether directed inflows keep the rule intact. Who keeps the AI surplus shows up in extra revenue per unit of capital spent.
Maintenance capital expenditure, supplier margins and the return on capital actually earned count as well. Depreciation calendars do not answer it. It is also open in which residences deferral survives above the caps on large fund wrappers.
For investors outside the United States, the dollar drag is not quantified when the trading currency and the currency of earnings diverge. Segregated securities can be frozen and still identifiable. Cash is the weaker claim.19
Sources
- Yahoo Finance, quote for the iShares MSCI ACWI ETF: trailing price-to-earnings ratio 20.74 on 22 October 2026
- Barron’s, S&P 500 price-to-earnings ratio: 23.51 on 16 October 2026
- iShares, country and sector weights of the MSCI ACWI ETF, as of 21 October 2026
- UBS Global Investment Returns Yearbook 2024, summary: world equity premium over bills
- Bessembinder, Chen, Choi and Wei, Financial Analysts Journal, 2023: long-term returns of about 64,000 stocks, 1990 to 2020
- Yahoo Finance: the largest companies in 1989 and their later weight
- Survey of UCITS ETF taxation by residence, including the German advance lump sum, UK reportable income, Ireland and Denmark
- Guide to the Dutch Box 3 bill, as of early October 2026: lower-house vote, Senate approval still outstanding
- Morningstar: Revisiting 80 Years of Sloth, Voya Corporate Leaders Trust against the S&P 500
- Koala Gains, specialist source, 2026: discounts on Investor, Exor and Prosus
- Scottish Mortgage, annual report to 31 March 2026 and the position at 30 June 2026: discount to fair net asset value
- Reuters Breakingviews, 12 July 2024: the railway mania, return on capital and the decline from the 1845 peak
- Smolyansky, Federal Reserve, FEDS: End of an Era, the contribution of interest rates and corporate tax to US profit growth, 1989 to 2019
- Prime brokerage guide, summer 2023: recalls of borrowed shares and discretionary margin
- AQR, Chasing Your Own Tail Risk, Revisited: put options and terminal wealth
- Tax Foundation: wealth tax, exit tax and deferred income transferred out of Norway, 2022 to 2023
- ISS Stoxx: Saba, seven UK investment trusts, failed votes and the windings-up and tender that followed
- NSE notice on the Investor Education and Protection Fund: transfer of the shares after seven years without a claimed dividend
- ESMA, Advice on asset segregation: separation of client securities from the bank’s assets
How this analysis is produced
The assessment is produced in several steps. Independent model families answer the same question separately and then attack the results. What you read here has survived several rounds.
- Two independent first theses. The same opening question goes to several model families that cannot see one another. Disagreements are kept, not averaged away.
- Dated evidence. Every claim that depends on facts is broken into individual search questions and answered with dated, sourced web research. Question, answer, sources and timestamp are logged and remain traceable.
- Adversarial review. Several review roles attack the thesis from different angles: one hunts for the strongest refutation, one for the awkward edge cases, one tests whether a path from thesis to share price exists at all, one checks the timeline for contradictions. Each role raises its own questions, which are again answered with evidence.
- Merge, then the next round. The surviving theses are merged into one and attacked again. The counter-position and the unresolved tension on this page come out of that step. They were not bolted on afterwards to look balanced.
- Back to the start. The process runs again until there is a clear result and a list of tradable companies with structural advantages.
Any analysis can be wrong. That is why the falsification criteria and the counter-position sit on the same page as the thesis, not in the small print.
The numbers shown against individual companies do not come from this process. The Business-Rating scores business-model quality, the Market-Fit-Rating eighteen fundamental figures against the current market, the Cycle-Rating the valuation against the stock’s own history. They are documented under the Leeway scores.
Questions from investors
Distributing or accumulating?
Where the residence taxes accumulated income anyway, the distributing class is the fitting one. In Germany the Vorabpauschale can defer part of the tax, so the accumulating VWCE.DE is the class to consider. In the United States, Singapore, Hong Kong and the UAE, tax does not decide the choice.
Do short positions break the rule of never selling?
Covering a short is a purchase. It must not touch the equity core. The shorts therefore sit in their own entity, net long, with gross notional of about 5 to 8 percent.
What would force a sale of the core?
Law, a corporate action with no choice, failure of a sponsor or wrapper, a tax on holding above the distributions, and sanctions. Valuation, the business cycle and technology are not reasons. The reserve exists so that cash does not have to come from the core.
Evaluate the selected companies with the three Leeway ratings
The Business Rating assesses business model quality, the Market-Fit Rating evaluates fundamentals in the current market regime, and the Cycle Rating contextualises valuation within the company’s history. Evaluate each company with Leeway’s general equity analysis.
Company Valuation and Fundamental Analysis
The data is recalculated on a weekly basis and depends on the current market value of the company and the balance sheet figures of the annual financial statements. The market value changes continuously with price changes, the balance sheets are created annually and change the valuation massively. The time of the annual financial statements and the metrics used can be viewed under "Metrics". Further information on how the analyses work can be found as tooltips directly on the analyses as well as in our explanations.
General
The information is intended to support you in your independent decision-making in implementing investment strategies and serves purely informational purposes. Past performance is not a reliable indication of future performance. No warranty can be given for the completeness, correctness and accuracy of the listed content. The information does not constitute specific investment recommendations. We neither know you nor your financial situation and do not provide investment advice. Only licensed investment advisors with knowledge of your personal circumstances may do this. PWP Leeway UG (limited liability) is not an investment advisor and does not collect any personal data for the purpose of investment optimization. PWP Leeway UG (limited liability) is a provider of investment recommendations and investment strategy recommendations. As such, it is registered with and supervised by the Federal Financial Supervisory Authority (BaFin). The legal notices on the use of the website and the General Terms and Conditions of PWP Leeway UG (limited liability) also apply.
All price data are closing prices of the respective stock exchanges. Price information and master data are provided by an external service provider. Furthermore, public trading data, such as provided by Finra.org, is used to analyze market behavior. No warranty can be given for the completeness, correctness and accuracy of the listed content.
Disclosure of interests: To the best of our knowledge, Leeway and the persons responsible for creating or publishing the respective content do not hold a net long or net short position exceeding 0.5% of the issued share capital of any issuer discussed in that content at the time of publication. There are no other interests or business relationships that could conflict with objectivity, unless expressly stated otherwise in the respective content.
