Reflections on True Wealth
Raphael Martorello
Managing Partner, Founder & CIO
Refinement Over Reinvention
Recently, I was reading “You Are the Placebo,” by Dr. Joe Dispenza, which explores the idea of discarding the old and becoming a “new version” of ourselves through meditation and belief. Being a bit of a self-help enthusiast, I was intrigued and began experimenting with the concept through deeper reflection.
As I did, I kept coming back to a simple realization: I like most parts of who I am already and don’t always need to look for change. While there are certainly areas to improve, the idea of a full “replacement” felt a bit extreme. A more balanced approach—appreciating what’s working while improving what isn’t—felt more natural and sustainable.
This balanced approach feels particularly relevant to investing today. With increased volatility in Q1 2026, markets were choppier, headlines louder, and the path forward less predictable. That said, environments like this don’t call for abandoning a well-built plan; they call for refining it. Core positions, thoughtful diversification, and private investments continued to play an important role in supporting our clients’ growth, stability, and income needs. At the same time, we made targeted portfolio adjustments to reflect the evolving landscape. One example was increasing our exposure to international equities over the past several quarters, as market leadership shifted after a long period of U.S. dominance.
I encourage you to explore Stephanie’s Public Portfolio update where she outlines our core public portfolio philosophy and recent adjustments. Sam’s Private Portfolio section provides additional insight into how our specific private investments support portfolio stability and income. And Nick’s Advisory update on Lifetime Gifting offers thoughtful ideas for supporting the next generation while maximizing tax efficiency today.
I hope you too find many reasons to be grateful for who you are and only tweak the few pieces you want to improve. We certainly are grateful for you, and for allowing us to be part of your journey to Make Life Count.
This commentary is provided for informational and educational purposes only and reflects the views of the author as of the date published. It is not intended as investment advice, a recommendation, or an offer to buy or sell any security. Investing involves risk, including the potential loss of principal, and past trends or historical observations do not guarantee future results. Readers should consult with a financial professional regarding their individual circumstances.
Advisor Insights
Nick Pirnack, CEPA®
Partner & Senior Advisor
Embracing the "Warm Hand" Approach: Shifting from Post-Mortem Inheritance to Lifetime Gifting
In our work with families, we're witnessing a meaningful shift in how wealth is transferred. The classic "post-mortem" inheritance, in which assets are passed down after death, is increasingly giving way to the "warm hand" approach. This strategy involves transferring assets while you're still alive, allowing you to witness the positive impact firsthand. Whether it's funding a grandchild's college education, helping with the purchase of a first home, or supporting any other pressing needs, this method brings immediate joy and purpose to your giving. Unlike the traditional model, which often arrives too late in life for the most impact, the warm hand philosophy ensures your resources make a difference during the moments that matter most.
The drawbacks of the conventional inheritance model are becoming more apparent as demographics evolve. Historically, inheritances have been seen as a final act of generosity, but data reveals they frequently miss the mark in timing. Studies indicate that the average age for receiving an inheritance is now around 51, up from about 41 a few decades ago (https://www.crews.bank/charts/average-inheritance). This delay is largely due to longer lifespans, with people living well into their 80s and 90s. By age 51, your children are typically in their prime earning years, with established careers and less need for extra funds. Key life milestones—buying a first home, launching a business, paying off student loans, or starting a family—have often passed without that crucial support. This mismatch can lead to missed opportunities, in which inheritance becomes more of a bonus than a gamechanger.
Favorable 2026 tax policies present an especially compelling opportunity to adopt the warm hand strategy. Under current federal law, the estate and gift tax exemption is $15 million per individual, or $30 million for married couples, and is indexed annually for inflation. Tax laws are subject to change, so it’s important to review your estate plan periodically. This high threshold means that for most families, lifetime gifting won't trigger federal taxes, provided you stay within the limits. Delaying planning decisions may limit flexibility as asset values and tax laws evolve.
Start small to test the waters. The annual gift tax exclusion allows you to give up to $19,000 per person ($38,000 for couples) without dipping into your lifetime exemption or filing a gift tax return. You can observe how recipients handle the funds, offer gentle guidance, and ensure alignment with family values.
From a strategic financial perspective, the warm hand method can be tax-efficient when gifting appreciating assets, depending on individual circumstance. By transferring assets during your lifetime, the current value of those assets is effectively removed from your estate. Any future appreciation occurs outside of it, rather than increasing the size of your taxable estate under current law. This preserves more wealth for heirs and maximizes the impact of your giving. If you choose this route, it’s important to retain enough assets for your own retirement or healthcare needs. Consulting with financial advisors can help tailor a plan that balances generosity with security, perhaps incorporating tools like irrevocable trusts for added control.
In essence, wealth isn't just about accumulation; it's a powerful tool for creating real-world impact. Switching to warm hand transfers turns a delayed windfall into an opportunity for positive change, with the invaluable bonus of seeing the benefits unfold in real time. If this resonates with your values and circumstances, this may be a suitable time to revisit your estate plan. By acting thoughtfully today, you're not just passing on assets, you’re nurturing a vibrant, supportive legacy that endures across generations.
LotusGroup Advisors, LLC is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This commentary is a general communication for informational purposes only and is not intended as a solicitation to buy or sell any specific security or to provide personalized investment, tax, or legal advice. Tax laws are subject to frequent change and vary by state. This information is based on federal laws in effect as of 2026. LotusGroup does not provide formal tax or legal advice; you should consult with a qualified tax professional or estate attorney before implementing these strategies. All investing involves risk, including the loss of principal. Past performance is no guarantee of future results.
Public Market Highlights
Stephanie Schlemeyer
Partner & Public Portfolio Manager
Q1 2026 Review: Market Performance and Portfolio Positioning
What Happened in the Markets?
Market conditions in the first quarter of 2026 reflected a shift in leadership as global economies navigated new geopolitical realities and supply chain pressures. Outcomes varied significantly based on asset mix and risk exposure. Highlights include:
- Commodities: The broad Bloomberg Commodity Index was the top-performing asset class in Q1, driven by a significant energy spike following disruptions to critical global shipping lanes.
- International & Emerging Markets: Performance was led by export-oriented regions and energy-heavy markets, which benefited from relative value early in the quarter. While these regions outperformed the U.S. for the full period, they faced a sharp reversal in March as the U.S. dollar strengthened.
- U.S. Equities: Domestic markets entered the year with strong momentum but ultimately lagged international peers as a sharp March correction led to the worst quarterly return for the S&P 500 since 2022. This weakness was concentrated in high-growth technology sectors where investor sentiment cooled significantly, while more defensive, value-oriented areas of the market showed greater resilience.
- Fixed Income: Bonds maintained a stabilizing role in portfolios, outperforming equities for the quarter as yields adjusted to evolving inflation data.
- Gold: Performed well, reaching record highs as investors sought diversification against geopolitical instability before paring gains late in the quarter.
Our Public Investment Philosophy
Our public investment philosophy is built on the belief that a strategy is only as effective as an investor's ability to maintain it. We utilize a systematic, research-driven framework to act as an anchor, relying on objective market indicators rather than emotional reactions to headlines. By utilizing globally diversified ETFs and, where appropriate, private alternatives, we aim to provide the structural guardrails necessary to help clients stay the course through full market cycles.
Portfolio Positioning Overview
Portfolio positioning across strategies transitioned this quarter to reflect shifting sentiment data. Tactical strategies increased equity exposure as previous extremes in optimism reverted to neutral levels, while global strategies remained fully allocated.
- Tactical Update: After entering the quarter with lower market exposure due to elevated sentiment, we recently increased equity allocations. This move was driven by reductions in investor sentiment to more attractive entry levels, combined with continued strength in underlying market trends.
- Global Update: These portfolios remained fully invested throughout the quarter. As designed, this strategy continued to capture market participation while price strength and upward trends remained intact.
- Index Update: These portfolios remained fully invested in their long-term allocations. Routine rebalancing was used to trim outperformers and add to lagging areas (systematic buy low / sell high).
Looking Ahead
We continue to focus on our clients’ long-term goals and the research-driven adjustments required to navigate evolving conditions. By matching strategies to behavioral profiles, we aim to provide the consistency required for investors to stick to their chosen investment models in all market environments.
This market commentary reflects general market observations and portfolio management principles and is not specific to any individual client account. This commentary is provided for informational and educational purposes only and is not intended as investment advice, a recommendation, or an offer to buy or sell any security. Market observations and portfolio positioning descriptions are general in nature and may not reflect the experience of all clients. Past market performance, asset class behavior, and portfolio characteristics are not indicative of future results. Investing involves risk, including the potential loss of principal. Asset allocation and diversification strategies do not guarantee a profit or protect against loss. Individual client results will vary based on objectives, risk tolerance, and market conditions. Private investments involve additional risks, including illiquidity, and are not suitable for all investors.
Private Market Update
Sam Redman
Director of Alternative Assets
Private Portfolio Update: Staying the Course
At LotusGroup, our private investing philosophy has been consistent for a long time: own assets backed by real collateral, avoid the fads, and focus on steady risk-adjusted returns over time. That philosophy is not new, we have been executing it for a decade, and moments like this one are exactly why it exists.
If you have followed financial news lately, you have likely seen headlines about private credit. Firms like Blackrock and Blue Owl 
have drawn scrutiny over valuation concerns, gating, and uncertainty around asset values[1]. These risks are concentrated in direct lending, private loans made to companies of all sizes, often with heavy exposure to software and technology. It is a space that grew enormously fast as investors chased yield and banks pulled back from lending following increased regulatory pressure after 2008. In many cases that growth outpaced the underlying fundamentals. LotusGroup has never participated in that space.
Our private allocation focuses on a distinct segment of the market. We invest in asset-backed lending, wholesale lending, and specialty finance, areas where every position is secured by tangible collateral like receivables, equipment, or real property. We also invest in real estate and real assets for income and inflation sensitivity. The common thread: if something goes wrong, there is something real to fall back on. That is a very different risk profile than a loan backed primarily by a company's future growth projections.
As Raph noted in his CIO section, this environment calls for discipline, not reinvention. Our private holdings are designed to provide income and stability alongside your broader portfolio, and that positioning remains intact.
Given that backdrop, we remain committed to the same disciplined philosophy and asset focus that has guided our previous private allocations. If you are curious whether it makes sense for your situation, please do not hesitate to reach out.
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[1] Bloomberg, "BlackRock Slashes Another Private Loan Value From 100 to Zero" (March 5, 2026); Wall Street Journal, "Blue Owl's $36 Billion Private Credit Fund Hit by 22% Withdrawal Request" (April 2026).
This commentary is provided for informational purposes only and reflects the views of LotusGroup as of the date published. SEC registration does not imply a certain level of skill or training. This is not intended as investment advice, a recommendation, or an offer to buy or sell any security. References to industry firms (e.g., BlackRock, Blue Owl) are based on public reports provided for context and do not constitute an endorsement or a guarantee of outcomes. Private and asset-backed investments are speculative, illiquid, and involve significant risk, including the potential loss of principal. While collateral provides a layer of security, its liquidation value is not guaranteed. Past performance is not indicative of future results.
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