How Tax-Loss Harvesting Is Naturally Baked Into Our Process

Our blood boils a little bit every time we hear someone repeat the myth that risk management and tax efficiency are like oil and water. In our view, the real conundrum is that most tactical managers do not place proper emphasis on taxes, while most tax-efficient portfolio strategies do not adequately account for portfolio risk.

In the spirit of transparency, we admit we also didn’t fully appreciate the role of trend following in delivering tax alpha for investors until we dug deeper into feedback we received from a few partners. Fortunately, we quickly learned from our oversight and have since made tax management a cornerstone of our risk-managed, systematic investing process.

Systematic Investing Strategies Can Be Inherently Tax-Friendly

The trend-following strategies used by Komara Capital Partners are naturally tax-friendly because we incorporate timeframes with varied duration.

This time diversification inherently leads to:

• Shorter-term timeframes selling losing positions quickly when prices fall — this could potentially accumulate losses that may be used to offset future gains.
• Holding gains if uptrends persist, with longer-term timeframes usually allowing us to harvest a portion of gains after 12 months — this may reduce the potential for significant tax bills.

The result is a smoothing out of the tax profile, as well as less choppy ride for clients.

Blueprint Financial Advisors d/b/a Komara Capital Partners is not a legal or tax advisor. However, we will work with you, your accountant, tax advisor and attorney to help you meet your financial goals. Since no one investment program is suitable for all types of investors, you should carefully consider investment objectives, risks, charges and expenses.