Market Insight by Matthieu Dulguerov - Does form matter?

An investment vehicle is a financial product that provides investors with asset management services. Behind every product – Berkshire Hathaway, for instance – there is substance and form. The substance is the securities portfolio, resulting from an investment process applied to an investment universe. The form is the legal framework, addressing all regulatory and contractual criteria affecting the investment vehicle. 

You may be among those who consider that the form chosen by Warren Buffett to implement his investment strategy is incidental and that his financial success, and that of his recently deceased associate, Charlie Munger, is solely due to their investment decisions. If so, we will attempt to convince you otherwise, by demonstrating that a necessary condition for a product to succeed is the correspondence between its substance and its form.