Delivering Better Beta
Tax-Managed Core portfolios (TMC) are equity separate accounts that target a client-designated index. They seek to provide the consistent performance and diversification of index-based investing with active tax management and per-client customization. Parametric created its first TMC portfolio in 1992 and we currently offer a full range of US, Non-US, and global equity TMC mandates.
Investors and their advisors increasingly seek core-market exposure as they structure portfolios. Consistently capturing the performance and risk attributes of a given market or market segment (or "beta") is important in delivering the benefits of asset allocation. TMC is more than a low-tax core portfolio. It is an investment building block that allows an investor to simplify and, at the same time, creates the flexibility to do more. Parametric’s research supporting TMC and tax-managed equity investing leads the industry. Over the past 20 years, we have successfully addressed hundreds of complex customization requests from our clients. No other manager focuses more on addressing client-specific needs than Parametric.
Index mutual funds and ETFs may deliver index-tracking returns with low turnover, but as commingled investment vehicles, they generally cannot provide customization or be designed to accommodate an investor’s taxes. Parametric’s Tax-Managed Core portfolios represent a significant improvement: customized market or market segment exposure and a potentially lower tax bill.
TMC Overview
By providing... You may achieve…
Separate Accounts Maximum flexibility − with the power to actively manage taxes, harvest losses, and customize holdings to an investor’s needs and preferences.
Core Market Exposure Consistent market-like returns along with low-cost diversification, risk
management, and low capital-gain realization.
Proprietary Technology Rigorous, daily monitoring of each portfolio − with the ability to quickly adjust to benchmark changes, garner a tax benefit, or respond to tax-law changes.
Custom Analysis An individualized assessment of your portfolio − with insights on how to transition assets, optimize distributions, or lessen the impact of taxes and costs.
Individualized Reporting Industry-leading after-tax-performance reporting with portfolio data that’s easy to understand and that provides relevant information for the investor.
Benchmark Flexibility
Parametric builds tax-efficient, separate accounts that can be benchmarked to virtually any standard or customized index. Some examples are shown in the table below.
Large Cap Mid/SmallCap Broad Market Value/Growth International Social Responsibility Non-Cap Wtd./Custom
S&P 100 S&P MidCap 400 S&P 1500 S&P 500/Citigroup Growth MSCI World MSCI KLD 400 Social Index (KLD400) FTSE RAFI US 1000
S&P 500 S&P SmallCap 600 Russell 3000 S&P 500/Citigroup Value MSCI EAFE MSCI USA Broad ESG Index (USSA) FTSE RAFI US Mid Small 1500
Russell Top 200 Russell Midcap Russell Top 200 Growth MSCI USA Large Cap ESG Index (USSL) FTSE RAFI Developed Ex-US 1000
Russell 1000 Russell 2000 Russell Top 200 Value MSCI USA ESG Index (USSLM) Custom Weighted i.e., S&P 500 excluding financials
NASDAQ 100 Russell 2500 Russell 1000 Growth MSCI Global Climate 100 Index (GC100) Custom Social Concern i.e., Russell 1000 excluding tobacco
Russell 1000 Value MSCI USA Catholic Values 400 Index (CV400)
Russell 3000 Growth MSCI World ESG Index (GSIN)
Russell 3000 Value MSCI World ex-US ESG (GSXU)
