Tax-managed strategies

Tax-managed accounts are investment solutions designed to help minimize tax liabilities and boost returns by taking advantage of tax-smart strategies. For a more comprehensive tax advantage, advisors can pair these accounts with Envestnet’s Tax Overlays in an effort to enhance portfolio outcomes beyond standalone solutions.

How can advisors leverage tax-managed accounts?

Tax-managed accounts are designed to help maximize tax efficiency through portfolio management strategies like tax loss harvesting. Options include mutual funds to limit capital gains, tax-managed SMAs, ETFs offering low-turnover and in-kind redemptions, and UMAs that combine multiple investment vehicles into one account with a tax-aware overlay.

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Manage after-tax returns for your clients

Enable tax loss harvesting

Implementing tax loss harvesting strategies allows for the realization of losses to offset gains, thereby reducing taxable income.

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Reduce tax drag

By minimizing unnecessary taxable events, tax-managed accounts help in reducing tax drag, enhancing the efficiency of investment management.

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Manage after-tax wealth

Aligning investment strategies with clients' specific investment objectives ensures the growth of after-tax wealth over time.

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How does tax-managed investing compare?

Compared to traditional investment methods, tax-managed strategies focus on after-tax returns, providing clients with more efficient investments. These accounts can offer significant tax savings – particularly when advisors deploy techniques like tax loss harvesting and strategic asset allocation.

Envestnet’s comprehensive solutions, including tax overlay services and direct indexing, empower advisors to implement personalized, tax-efficient strategies that go beyond standard portfolio management.

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This is a hypothetical illustration and not meant to represent an actual investment strategy.
Tax drag is the reduction of potential investment returns due to taxes.
Taxes may be due at some point in the future and tax rates may be different when they are.
Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Frequently asked questions about tax-managed accounts

What is a tax-managed SMA?

A tax-managed separately managed account (SMA) is a personalized investment portfolio where individual securities are directly owned by the investor. This structure allows for customized tax strategies, including targeted tax loss harvesting and tailored asset allocation.

What is a tax-managed mutual fund?

A tax-managed mutual fund is designed to minimize capital gains distributions through strategic trading and holding periods. This approach helps investors manage their tax liabilities while pursuing their investment goals.

How does tax drag impact investment returns?

Tax drag refers to the reduction in investment returns due to taxes on capital gains and income. Effective asset allocation and tax-efficient strategies can mitigate this impact, enhancing after-tax returns.

Does Envestnet offer tax-managed accounts?

Envestnet provides access to tax-managed accounts via our wealth platform, through which we offer both mutual funds and SMAs. Our tax overlay services also include holistic tax management solutions to support advisors in optimizing their clients’ portfolios.

4 tips for managing capital gains taxes

Taxes are often a client’s biggest expense. But they can also create an opportunity to enhance your value by proactively identifying ways to help your clients save.

Schedule a 15-minute discovery call with us to discuss tax management strategies for your practice.

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Disclosures
The information, analysis, and opinions expressed herein are for general information only. Nothing contained in this website is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Investing carries certain risks and there is no assurance that investing in accordance with the portfolios or strategies mentioned will provide positive performance over any period of time. Investors could lose money if they invest in accordance with the portfolios or strategies discussed herein. Past performance is not indicative of future results.

Neither Envestnet, Envestnet | PMC™️ nor its representatives render tax, accounting or legal advice. Any tax statements contained herein are not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Taxpayers should always seek advice based on their own particular circumstances from an independent tax advisor. Client must carefully determine if the use of tax overlay services is appropriate for their circumstances, risk tolerance, and investment objectives. Tax management services are limited in scope and are not designed to permanently eliminate taxes in the account. In providing tax overlay services, Envestnet will allow Client's account to deviate from Client's selected investment strategy. Client's account may experience significant performance differences from the selected investment strategy due to Client's selection of tax overlay services. Envestnet makes no guarantee that the account's performance will be within any range of the selected investment strategy or the strategy´s benchmark. If Client subsequently disables tax overlay services this may result in the recognition of significant capital gains.