Tax Aware

Multi-Period After-Tax Reporting: A Practical Solution

Topics - Tax Aware Portfolio Risk and Performance

Read Time - 25 min

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Multi-Period After-Tax Reporting: A Practical Solution

After-tax performance reporting is critical for taxable investors but is unfortunately often overlooked due, in part, to its complexity and lack of offerings in the space. Instead, most performance reporting models available today provide only pre-tax reporting, ignoring the after-tax aspects so relevant for taxable investors. In this paper, we seek to resolve this issue by proposing an effective and workable after-tax performance report aimed at enhancing wealth preservation and accumulation for taxable investors. We also outline and offer justification for the various choices that we make in our report in the hope that others will adopt our proposed solution, but also review, comment, and improve on it.


The Journal of Wealth Management

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The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management, LLC, its affiliates or its employees. This information is not intended to, and does not relate specifically to any investment strategy or product that AQR offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein. Past performance is not a guarantee of future results.

 

Hypothetical performance results have many inherent limitations, some of which, but not all, are described herein. Hypothetical performance results are presented for illustrative purposes only.

 

Diversification does not eliminate the risk of experiencing investment loss.

 

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This material is intended for informational purposes only and should not be construed as legal or tax advice, nor is it intended to replace the advice of a qualified attorney or tax advisor.