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  Home > Press Room > Blog> Tax Alpha and the When Factor



BLOG SERIES: Tax-Aware Investing

Tax Alpha and the When Factor

Introduction

In this blog series we will explore how investment managers can use intra-year tax alerts – reports on tax implications of securities transactions – to adjust trading activity and harvest tax alpha. Managers can avoid having to report unexpected disallowed losses or even tax liabilities on non-existent gains to clients when they use daily, weekly or monthly proactive and predictive tax alerts.



Tuesday May 12, 2015 Blog 1: More tax analyses more often . . . when it counts.

We’ve heard it over and over. To affect change, achieve results "It’s not what you know but what you do that counts." Well when information is acquired can have a huge impact on how that information is used and also on results, especially in the world of finance. To achieve positive results/alpha, investment managers rely on daily market-related alerts on positions and portfolios to monitor and improve the economic health of their investments. Tax-aware investment managers take the when factor to another level. To optimize results throughout the year, they rely on intra-year tax-related alerts to monitor and improve the after-tax health of their investments. These daily, weekly or monthly tax alerts / tax analyses of securities transactions (TAST) inform investment managers of the tax consequences of their trading. These alerts give investment managers the chance to adjust trading activity during the year in order to avoid telling clients at year end of unexpected disallowed losses or worse yet of tax liabilities on non-existent gains. Whether proactive or predictive, tax alerts are powerful tools that can help managers deliver optimal after-tax returns and harvest tax alpha.

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Tuesday May 19, 2015 Blog 2: Proactive Tax Alerts

To invest tax-efficiently, investment managers can run tax analyses of their portfolios all year long– yearly, quarterly, monthly and daily. Proactive reports (tax analyses of potential trades on current holdings) or predictive reports (tax analyses on possible new acquisitions) can inform investment managers of the tax implications of their trading. These reports enable them to make trading adjustments during the year when the tax impact is not yet indelible. In our first blog, “More tax analyses more often . . . when it counts” fictional investment manager Janet Diamond runs a proactive tax alert report that helps her client, Sara Lee, benefit from a lower tax rate and still earn much needed income from dividend-producing stock. This blog takes a deeper dive into proactive tax alerts and their benefits. We discuss different tax analysis reports that are run at different intervals. With the help of more fictional investment managers, we illustrate how these reports can be used for tax-loss harvesting and as a way to avoid taxable events, such as constructive sales.

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Tuesday May 26, 2015 Blog 3: Predictive Tax Alerts

So far this blog series has explored intra-year proactive tax reports (tax analyses of potential trades on current holdings). We introduced fictional investment managers, Ms. Gomez and Ms. Stern who use tax analyses to optimize results throughout the year in order to improve the after-tax health of their investments. Tax alerts help Ms. Gomez and Ms. Stern generate tax alpha by allowing them to harvest tax losses and avoid taxable events. In posts 1 and 2 we alerted you (pun intended) that our final post would discuss predictive tax alerts (tax analyses on possible new acquisitions).

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