Assets in tax-aware long-short strategies have soared from about $2 billion four years ago to more than $170 billion today, according to Tax Alpha Insider. In this video, Atlas Capital Advisors Chief Investment Officer Ken Frier explains how tax-aware long-short strategies work and why they can have advantages over traditional long-only tax-aware investing.
Ken explains why long-only tax-aware accounts often “freeze” after about five years, when nearly every position has a gain and few losses are left to harvest. He then shows how a 100/30 long-short structure expands stock selection and tax-loss harvesting from $7 million to $13 million of positions in a $10 million account, without changing net stock exposure. He also shares the actual results of Atlas’s longest-running 100/30 long-short account and covers the added costs, risks and custodian restrictions investors should understand before getting started.
Topics covered
- What a tax-aware strategy is, and why it defers taxes rather than eliminating them
- Why the tax benefits of long-only strategies can diminish quickly
- How a 100/30 long-short account is structured, with a $10 million example
- Actual annualized performance of the Atlas 100/30 long-short strategy (net 70% long) versus a 70% S&P 500 / 30% T-bill benchmark
- How Atlas ranks the 1,000 largest US stocks on value and momentum and harvests losses lot by lot
- Long-short costs and risks: margin, borrowing costs, dividends owed on shorts, turnover, unlimited short losses and benchmark deviation
Watch the video to learn how tax-aware long-short strategies could help you keep more of your money after taxes. Please review the performance information and disclosures at the end of the video.
