OSAM: Without Tax Management, Investors Leave Money on Table

OSAM: Without Tax Management, Investors Leave Money on Table

O’Shaughnessy Asset Management (OSAM) says financial advisors should “look to customized tax management and savings as a source to maximize after-tax return.” This according to a recent article in Businesswire that describes Canvas, the firm’s proprietary indexing platform.

The article argues that as pooled funds, index funds and ETFs do enjoy certain tax advantages over traditional mutual funds but are “far less efficient than separately managed accounts.” As the creator of Canvas, OSAM offers a custom indexing platform intended to optimize tax management and loss harvesting, the article notes.

According to OSAM CEO Patrick O’Shaughnessy, “Of late, a diversified index portfolio has been hard to argue against. However, the vehicle you use to express the index matters. In funds, you can’t sell individual companies, only the entire fund share. Nobody wants losers but they exist. When correctly leveraged, individual losers can be used to off-set capital gains, increase after-tax return, and reduce portfolio risk.” He adds that with Canvas, “positions are continuously monitored and when appropriate sold at a loss to create a tax asset, making good out of bad.”

Canvas employs a four-pronged approach:

  • Portfolio Transitions: “Advisors can upload a file of current holdings and immediately see a tax cost/benefit analysis – enabling advisors to easily explain options, adjust appropriate levers, establish a clear transition plan to the desired portfolio, and then execute it.”
  • Tax Budgeting: Canvas allows advisors to create an annual tax budget that accounts for the client’s state and federal tax rates.
  • Ongoing Management: Tax loss harvesting opportunities are continuously monitored and the system rebalances the portfolio according to its investment objectives.

Performance Reporting: Advisors can monitor after-tax performance within the Canvas platform