Tax Strategy Optimization
Understanding Tax Liabilities
Potential tax liabilities are an important consideration for any sophisticated investment adviser. Our model looks at the time value of deferring taxes paid for 20 years as part of analyzing expected returns of existing holdings versus replacement candidates. Yes, if a change is compelling enough, losses will be recognized. However, the key to tax efficient investing is not being hesitant to recognize gains if disciplined analysis dictates such action. Tax alpha can’t be analyzed in a vacuum; it’s an input to optimal portfolio construction that maximizes risk controlled expected return.