12.11.2023 - Tax Loss
Tax-loss Harvesting: A Primer
Presented by Professor Harry Mamaysky and
Investors have access to a multitude of personalized indexing products, a key benefit of which is to allow for tax-loss harvesting (TLH). In this webinar, Professor Harry Mamaysky, Columbia University, uses a simple example to demonstrate many features of TLH and establish an invariance result which highlights circumstances where TLH does not matter. Using simulations, Professor Mamaysky analyzes the seasoning effect of TLH strategies and show that, absent investment inflows, the majority of TLH benefits accrue in the first few years of the strategy. Lower return correlations and a larger difference between high intermediate and lower terminal capital gains tax rates increase the benefit of TLH.
Attendees Comments:
When attendees were asked what they learned, they responded:
I like the independent quantification of the potential benefits of direct indexing. For someone with offsetable gains (not everyone), expecting to use the money in their lifetimes (many), and in a similar tax bracket over time (many), the benefits are 30bps. Direct indexers are basically receiving all of the gains from the strategy. And... a couple of years into a direct indexed portfolio leaves the client locked into the strategy forever - not a bad deal for the direct indexer.
- Mark W.
Understanding the actual mathematics for utilizing TLH The actual proposed time period to wait before implementing the strategy. Understanding concepts of the Wash Sale Rule & at when implementing the strategy is actually beneficial.
- Darin D.
TLH is beneficial only to the extent there are contemporaneous or future gains outside the portfolio to offset, and the saved taxes are reinvested. Excellent speaker - one of the best I've heard in this webinar series.
- Frederick M.
I like the independent quantification of the potential benefits of direct indexing. For someone with offsetable gains (not everyone), expecting to use the money in their lifetimes (many), and in a similar tax bracket over time (many), the benefits are 30bps. Direct indexers are basically receiving all of the gains from the strategy. And... a couple of years into a direct indexed portfolio leaves the client locked into the strategy forever - not a bad deal for the direct indexer.
- Mark W.
Understanding the actual mathematics for utilizing TLH The actual proposed time period to wait before implementing the strategy. Understanding concepts of the Wash Sale Rule & at when implementing the strategy is actually beneficial.
- Darin D.
TLH is beneficial only to the extent there are contemporaneous or future gains outside the portfolio to offset, and the saved taxes are reinvested. Excellent speaker - one of the best I've heard in this webinar series.
- Frederick M.
I like the independent quantification of the potential benefits of direct indexing. For someone with offsetable gains (not everyone), expecting to use the money in their lifetimes (many), and in a similar tax bracket over time (many), the benefits are 30bps. Direct indexers are basically receiving all of the gains from the strategy. And... a couple of years into a direct indexed portfolio leaves the client locked into the strategy forever - not a bad deal for the direct indexer.
- Mark W.
Understanding the actual mathematics for utilizing TLH The actual proposed time period to wait before implementing the strategy. Understanding concepts of the Wash Sale Rule & at when implementing the strategy is actually beneficial.
- Darin D.
TLH is beneficial only to the extent there are contemporaneous or future gains outside the portfolio to offset, and the saved taxes are reinvested. Excellent speaker - one of the best I've heard in this webinar series.
- Frederick M.