The stock market downturn in Q2 2022 provided abundant opportunities for tax loss harvesting that can help improve after-tax investment performance.
~ Curt Overway, CFA®
Co-Head, Natixis Investment Managers Solutions

What Is Tax Loss Harvesting?
A portfolio can harvest its losses for tax purposes by selling investments when their current value is less than the price originally paid for the security. These losses can be used to offset other capital gains on an investor’s tax return. If there are excess losses, they can be used to offset up to $3,000 in ordinary income – or be banked for use in future years.

The market drawdown that began in the first quarter of 2022 gained momentum in the second. This created ample opportunities to harvest losses and generate tax benefits for investors in separately managed account portfolios.

With the market down overall for the year to date, the vast majority of stocks in the S&P 500® declined, as the chart shows.
  • While some stocks bucked the overall trend, nearly 80% have lost ground so far this year.
  • Even the Energy sector, which had performed relatively well in the first quarter, saw most of its constituents down for the year.
S&P 500® Losers Outnumbered Winners by a Significant Margin in the First Half Losers Outnumbered Winners by a Significant Margin in the First Half
Source: Thomson Reuters, Standard & Poor’s, Natixis Investment Managers Solutions.
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results.


While markets were down across asset classes, tax loss harvesting opportunities were up.
  • Virtually every asset class saw negative returns during the second quarter, leading to one of the worst starts to a year in a long time.
  • Concerns about inflation continued to hurt the bond market and the Bloomberg US Aggregate Bond Index finished down over 10% year-to-date.
Nowhere to Hide: Year-to-Date Returns for Selected Indexes (6/30/2022)Nowhere to Hide: Year-to-Date Returns for Selected Indexes (6/30/2022)Source: Factset
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results.


To learn more, please read the full Tax Management Update Q2 2022.

Resource

Tax Management Update Q2 2022

Read Full Update

Tax-Efficient Investing in Separately Managed Accounts (SMAs)

Direct Indexing SMAs can help address key issues facing tax-sensitive investors. All accounts are actively managed to optimize tax loss harvesting while providing beta exposure to an index. Our tax-managed SMAs include:

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CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

A tax liability is the total amount of tax debt owed by an individual, corporation or other entity to a taxing authority.

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.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

S&P 500® Index is a widely recognized measure of US stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors. It also measures the performance of the large-cap segment of the US equities market.

The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

Indexes are not investments, do not incur fees and expenses and are not professionally managed. It is not possible to invest directly in an index.

Investing involves risk, including risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

This document may contain references to copyrights, indexes and trademarks that may not be registered in all jurisdictions. Third-party registrations are the property of their respective owners and are not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis”). Such third-party owners do not sponsor, endorse or participate in the provision of any Natixis services, funds or other financial products.

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