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Whitepaper

Tax-Managed SMAs: Better Than ETFs?

September 23, 2020

As the COVID-19 pandemic and its economic burden persist, charitable organizations need additional support to meet many critical needs in our communities, particularly during the holiday season. Now may be a perfect time for taxable investors to think about making their donations through charitable remainder trusts (CRTs). This vehicle provides an income tax deduction for a portion of the donated value, as well as reducing the donor’s estate for tax purposes. It also allows the donor to avoid immediate recognition of capital gains taxes on donated appreciated assets.


Charitable remainder trusts come in two forms: the charitable remainder unitrust (CRUT) and the charitable remainder annuity trust (CRAT). However, an IRS rule makes CRUTs better suited in a low-interest-rate environment to achieve the dual purposes of a CRT: financial security for the donor’s family and support for their chosen charity. This paper discusses how the tax management capabilities of a Parametric Custom Core® separately managed account can help serve both purposes.

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Rey Santodomingo photo

Rey Santodomingo, CFA

Managing Director, Investment Strategy (emeritus)

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Andrew Subkoviak, CFA

Senior Investment Strategist

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