Quantifying the Value of a Tax Overlay: A Case Study

Highlights

• Investors and advisors often underestimate the impact that taxes have on investment portfolio returns – but tax-efficiency can also be difficult to measure.
• This study compares the results of pairs of accounts in which one uses tax-management techniques and the other does not.
• Tax management techniques include tax loss harvesting, short-term gain deferral, optimal tax lot selection and avoiding wash sale rule violations.
• Comparative results are highlighted over a 10-year period, with performance breakouts shown for each calendar year.