In recent years, the bond market’s notable decline has left fixed-income investors facing a tough situation. Many bonds and bond funds currently sit at considerable losses. Waiting for these securities to recover fully may take an extended period, especially considering that bonds lack the same potential for substantial upward movement as equities.
One strategy gaining traction among investors is “tax-loss harvesting.” This approach involves selling investments at a loss in non-qualified accounts to reduce tax liabilities in April 2024 potentially. Total return includes return from the underlying price change as well as return income distributions. Bond funds, which primarily distribute returns through income distributions, often display price returns below their total return. This insight is key to identifying tax-loss harvesting opportunities.
Leveraging tactics like tax-loss harvesting can substantially aid clients. This method, involving the realization of tax losses, helps offset prospective gains. The resulting capital can then be redirected toward alternative investment avenues, like transitioning to diverse fixed-income allocations with less drawdown risk and promising superior yields. This approach can potentially boost clients’ portfolios.
Tax-Loss Opportunity?
- We believe the preservation of capital is key to consistent, long-term investment success.
- Our investment approach is grounded in economic theory and backed by quantitative analysis.
- Managing drawdown risk is a pillar from which we build our portfolios.
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