NEW YORK--(BUSINESS WIRE)--Green Harvest Asset Management, an asset manager specializing in strategies designed to provide tax benefits through portfolios of exchange-traded funds (ETFs), announced today the release of a new white paper, “Future Value of Tax Benefits: A Penny Saved May be Two Pennies Earned.” The white paper details how investors are increasingly using tax benefit capture (TBC), sometimes called tax-loss harvesting, to increase returns by controlling their number one cost: taxes.
“Our research shows basic tax benefit capture programs provide the opportunity to harness untapped alpha, but more sophisticated approaches have the potential for even greater benefits and can improve chances of capturing benefits in a variety of conditions, including rising markets,” said Green Harvest Chief Investment Strategist Solomon Teller, CFA®. “Investors should understand robust TBC programs are dynamic, proactive processes requiring ongoing monitoring and evaluation of not only the individual investor’s circumstances, but also positions, exposures, trading costs, available securities, and the TBC program methodology itself.”
Lauded as a way to offset, defer, and in some cases completely avoid taxes that must otherwise be paid on capital gains, TBC can integrate well in an investor’s index portfolio. The paper reviews the benefits of sophisticated TBC programs and how they are quantified, top considerations for integrating TBC into a portfolio, and also provides various simulations of captured benefit results and reinvestments by investors.
According to the paper, a basic TBC program using exchange-traded funds that track the S&P 500® Index could add up to 2.9% per year of additional return, or tax alpha, on average over a five-year holding period. For perspective, Green Harvest illustrates how the additional return from capturing the full tax benefit opportunity could add up to $155,000 to a $1M portfolio’s fifth year ending value.
“Investors can benefit from the differential between short and long-term tax rates, as well as the time value of money, for as long as they can defer the gains realization and, with proper planning, potentially minimize or never pay gains tax,” said Robert Holderith, CEO and Chief Product Engineer of Green Harvest. “What we want to really highlight to investors is not only the immediate benefit of saving the money, but also the future benefit provided as that saved money grows.”
Green Harvest analyzed potential TBC opportunity in this paper using a rolling returns methodology over five-year holding periods for the last 20 years of S&P 500 Index monthly returns, which provided nearly 180 different starting periods to evaluate. The approach evaluated the potential benefits of TBC for a broad range of market conditions occurring during the distribution.
The full white paper is available to view at the Green Harvest website.
About Green Harvest Asset Management
Green Harvest Asset Management was formed in 2017 by a team of seasoned ETF and asset management experts to provide tax-beneficial investment products and services. Based in New York, New York, the firm specializes in creating and managing ETF portfolios seeking to track U.S., global and custom indices while maximizing after-tax returns. Because of the broad ETF expertise spread throughout the firm, Green Harvest is active in product development, ETF strategy development and trading. The firm regularly partners directly with wealth advisors to create and deliver the strategy that is best suited for clients’ needs. As of December 31, 2019, Green Harvest had $203 million in assets under management and advisement. In July 2019, Resolute Investment Managers, Inc., a diversified, multi-affiliate asset-management platform, completed a minority investment in the firm. Green Harvest operates as an independent affiliate of Resolute. For more information, visit www.greenharvestam.com and follow the company on Twitter (@GreenHarvestAM), LinkedIn and YouTube.
The Chartered Financial Analyst® (“CFA®”) designation is a globally recognized mark of distinction that attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management, research analysis and professional integrity.
Investments & Wealth Institute™ (The Institute) is the owner of the certification marks “CIMA®,” and “Certified Investment Management Analyst®.” Use of CIMA® or Certified Investment Management Analyst® signifies that the user has successfully completed The Institute’s initial and ongoing credentialing requirements for investment management consultants.