Active tax management

Pursue tax-management opportunities for your clients—and your business throughout the year.

Explore the benefits of tax-managed investing

Negative return ≠ zero taxes

Taxes can be a major headwind for taxable investors—even during down markets.

Many investors in U.S. equity mutual funds and ETFs experienced this painful truth in the four years that the market posted negative returns since 2000. As the table below illustrates, despite the negative returns, capital gains were still distributed and taxed.

YearMarket Return*Average Capital Gains Distribution (% of NAV)**
2001-12%4%
2002-22%2%
2008-37%8%
2018-5%11%
2022-19%7%

*Russell 3000 Index. **Morningstar U.S. OE Mutual Funds and ETFs.
% = Calendar Year Cap Gain Distributions / Year-End NAV. See disclosure section for more details.

It's easy to transition

If your clients hold tax-inefficient investments, consider switching to a tax-efficient investing approach when it fits your client's situation. At the very least, stop reinvesting the distributions back into those same tax-inefficient investments.

1. Build your tax-smart prospect list

Identify clients who may benefit from tax-managed investing and prioritize them depending on their current situation. Consider the client’s cost basis, marginal tax rate and their specific situation in your evaluation.

CONNECT NOW

Clients with loss harvesting opportunities

CONNECT NEXT

Clients who have cash on the sidelines and/or have come into large cash distributions

CONNECT ALWAYS

Taxable trusts: They cross the top marginal tax rate of taxable income

2. Follow these steps to switch to tax-efficient investing

steps to switch to tax-efficient investing

Take action now.

It's about more than tax-loss harvesting. It's about creating long-term wealth for clients—and for your business.


Try our tax-management tools

Demonstrate the value of tax management to your clients.

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Investment Proposal Tool

Create a tax-managed proposal for your clients with our Investment Proposal Tool.

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ILLUSTRATE

Value of Tax Management

See how much more return you may gain with a tax-managed portfolio.

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COMPARE

Tax Impact

Compare investment products on a tax-adjusted basis and quickly assess the tax implications between products and categories.

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**U.S. equity funds: Morningstar broad category ‘U.S. Equity’ (large/mid/small V/B/G) which includes mutual funds and ETFs (and multiple share classes. Average U.S. equity fund Distribution: Capital Gains/Share (% of NAV) based on Morningstar U.S. OE Mutual Funds and ETFs. % =Calendar Year Cap Gain Distributions / Year-End NAV. Distribution is assumed to be made at last day of year and reinvested. Tax rate is 23.8% (Max LT Cap Gain 20% + Net Investment Income 3.8%).

The Morningstar categories are as reported by Morningstar and have not been modified. © 2025 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Russell 3000® Index: Measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

Indexes are unmanaged and cannot be invested in directly.

The information contained herein is being provided to you for educational purposes only and is not intended to constitute investment, tax or legal advice nor a recommendation or solicitation to invest in any investment product. The general information contained in this publication should not be acted upon without obtaining specific investment, legal and/or tax advice from a licensed professional.

This material is not an offer, solicitation or recommendation to purchase any security.

Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.

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The information, analyses and opinions set forth herein are intended to serve as general information only and should not be relied upon by any individual or entity as advice or recommendations specific to that individual entity. Anyone using this material should consult with their own attorney, accountant, financial or tax adviser or consultants on whom they rely for investment advice specific to their own circumstances.

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