Managing Tax Costs with Index-Based Separate Accounts
Watch this overview of Natixis tax management solutions using customized separate accounts to help maximize after tax returns.
Active Index Advisors® (AIA) specializes in customized direct indexing portfolios. These separately managed account portfolios can be customized for tax purposes, to align with investor values and concerns, or a combination of both.
- Maximizing after-tax return
- Transitioning investment accounts
- Unwinding concentrated positions
- Estate planning
- Selling a business
- Specific GICS sectors, industries, or individual securities
- Investment styles, such as value, dividend or growth tilts5
- Environmental, social, and governance (ESG) criteria
- Racial equity investment portfolios
A Better Way to Index
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
Investor Applications for Direct Indexing
Learn how a direct indexing strategy can help control the tax impact of diversifying a concentrated stock position.
Learn why direct indexing with a separately managed account (SMA) is more tax-efficient than an index fund or ETF.
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 overweights 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.