Fund Driven By Ideas Of Supply-Side Economics Legend Is Launched

Tom Burroughes

14 May 2014

A fund run by a US firm taking its name from one of the most influential economists of recent times, Arthur Laffer, has been launched.

The American Independence Laffer Dividend Growth Fund, based on the existing Dividend Growth Equity Strategy of Laffer Investments, is being rolled out by American Independence Financial Services, an advisory firm and management house based in New York.

Laffer Investments, founded in 1999 at the peak of the dotcom boom, uses macro-economic models developed by the firm’s founder, Dr Arthur Laffer, who is a well-known advocate of what is called “supply-side economics” and advocate of cutting marginal taxe rates to boost growth. In particular, Laffer is associated with the idea that there is a curve-shaped picture of how much tax can be raised from different rates: zero taxes and 100 per cent taxes will raise no revenue, while there is, due to incentive effects, an optimum level somewhere in between. His views have become associated with political battles in the US and other countries about tax and spending; in particular, he is credited with shaping views of the administration of Ronald Reagan in the 1980s, and to some degree, the UK government of Margaret Thatcher in the same decade.

With the new fund, Laffer Investments will act as sub-advisor; American Independence will market it.

Laffer Investments will act as sub-advisor for the fund, which will be marketed to financial intermediaries in the US. The fund uses a bottom-up, fundamentally driven process in building portfolios. Its main aim is to build a total return by investing in a diversified portfolio of US-listed equity securities that offer an attractive combination of yield and the opportunity for growing dividends.