Tax Efficient Investing in Theory and Practice
Posted: Sat Apr 06, 2013 6:21 pm
The primary goal of this paper is to relate tax-management theory to a set of practical solutions for investors. First, I begin with an overview of basic tax-management tactics, including techniques, investment vehicles, and tax-ef?ciency measurements. Next, I discuss more advanced tax-management strategies related to asset allocation, asset location, and portfolio structure. I propose that tax-ef?cient portfolio management has evolved through several phases: from the traditional style box approach, to core-satellite investing, to overlay portfolio management.
Then I review the early literature on tax-efficient investing and simulate the benefit to
returns from careful tax management. In conclusion, I compare those predictions with
actual results realized over the last twelve years by Parametric across many thousands of
client accounts. The long track record, and the breadth of accounts that Parametric has
managed, makes this data set invaluable when assessing whether the benefits promised
by theory have been evident in practice.
http://www.parametricportfolio.com/wp-c ... 11.CA_.pdf
Then I review the early literature on tax-efficient investing and simulate the benefit to
returns from careful tax management. In conclusion, I compare those predictions with
actual results realized over the last twelve years by Parametric across many thousands of
client accounts. The long track record, and the breadth of accounts that Parametric has
managed, makes this data set invaluable when assessing whether the benefits promised
by theory have been evident in practice.
http://www.parametricportfolio.com/wp-c ... 11.CA_.pdf