Erosion is a reductive process. Left unmanaged, the consequences to natural landscapes from wind, rain, and time are often significant and disruptive.
Erosion is a daily threat to your portfolio as well. In this context, the culprits are risk, costs, and taxes. They conspire to diminish returns. All must be managed very carefully − especially the grinding effect of taxes.
For more than 20 years, Parametric has been managing investment portfolios to mitigate the impact of taxes on performance. Over that time, we have navigated client portfolios through bubbles and bursts, a wide range of market volatilities, and multiple tax rate changes.
Although the Bush tax cuts were recently extended, there is little doubt that at some point, significant changes to the tax code will be made. Most signs indicate that rates will be moving up, which will increase the erosive effects of taxes and in turn, the value of thoughtful tax management.
Parametric’s Tax-Managed Core Portfolios are diversified equity portfolios that provide access to a broad range of client-chosen benchmarks. The portfolios are explicitly managed to mitigate the impact of taxes by employing powerful techniques that seek to defer gains and harvest losses, while maintaining tight tracking to the portfolio’s benchmark.
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