Managing Tax Costs with Index-Based Separate Accounts
Watch this overview of Natixis tax management solutions utilizing customized separate accounts to help maximize after tax returns.
Active Index Advisors® (AIA) brings indexing to the next level, with tax-managed separate accounts that can be customized to address specific investment objectives. Founded in 2002, AIA takes an active approach to passive investing that focuses on the concerns of high net worth investors.
The evolution of indexed investing
Accounts can also be customized, using screens related to:
- Specific GICS sectors, industries, or individual securities
- Investment styles, such as value, dividend or growth tilts5
- Environmental, social, and governance (ESG) criteria
Active indexing strategies can help address key issues facing tax-sensitive investors:
- Maximizing after-tax return
- Unwinding concentrated positions
- Transitioning investment accounts
- Estate planning
- Selling a business
Active approach to passive investing
The managers view indexes as raw ingredients that can be adapted to each client’s goals, using a robust set of proprietary tools and techniques. From planning through execution, Active Index Advisors® can provide a customized investment experience with four types of index based-strategies.
Tax-managed equity indexing
The flexibility of the separate account structure allows the portfolio managers to use tax loss harvesting techniques to sell securities that have lost value and bank those losses. The accrued losses can then be used to offset gains in other parts of the client’s portfolio.
- The Core Equity Plus strategies use a multi-factor risk model and optimizer to maximize expected excess return relative to the target index.
- Custom Smart Beta6 and Factor Tilt strategies – such as high dividend, momentum, value or multi-factor – are designed to offer better risk-adjusted return than respective market cap weighted benchmark.
- Positive ESG screens favor stocks that have a positive ESG rating or are best in class within their sector.
- Negative screens exclude specific securities based on sustainability, faith, or values-based guidelines.
Managed ETF portfolios
- Conservative, Moderate, Aggressive, and Global Equity portfolios
- Conservative and Aggressive Income portfolios
2 Index-based managed accounts are managed to track the performance of a specific benchmark index and hold individual securities owned directly by the investor.
3 A tax liability is the total amount of tax debt owed by an individual, corporation or other entity to a taxing authority.
4 Capital gain is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.
5 A portfolio tilt is an investment strategy that overweighs a particular investment style.
6 Smart beta defines a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization-based indices.
Natixis Advisors, L.P. does not provide tax advice. Please consult with your financial advisor or tax professional.
Investing involves risk, including the risk of loss.
Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and demonstrate adherence to environmental, social and governance (ESG) practices; therefore a portfolio’s universe of investments may be reduced. It may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor.