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Tax Matters
Tax-Aware Investing: Separating the Wheat from the Chaff
October 8, 2024
Investors seeking tax efficiency must look for strategies motivated by a pre-tax investment rationale, otherwise known as “economic substance.”
Tax Matters
Levering Up to Do Good
July 9, 2024
Long/short tax aware strategies can be a win-win for the charitably inclined: larger donations for the charity and larger tax benefits for the donor.
Working Paper
Levering Up to Do Good: Direct Long-Short Investing and Charitable Giving
April 23, 2024
We use historical strategy simulations to evaluate the advantages of donating appreciated stock in the context of tax-aware long-short factor strategies. We find long-short strategies exhibit several advantages over long-only investments.
Tax Matters
A 3-for-1 Solution for Concentrated Stock
April 9, 2024
Long/short tax-aware factor strategies may provide the means to offset gains resulting from a transition from a concentrated stock to a diversified portfolio.
Tax Matters
AQR Factor Research Papers Win Prestigious Academic Awards
March 12, 2024
Factor investing (combined with tax-aware implementation) can offer investors substantial rewards in the form of both pre-tax returns and tax benefits. Two papers by our colleagues recently won highly prestigious awards from top academic and practitioner journals for their research on factor investing, demonstrating our commitment to top-notch factor research.
Working Paper
Combining VPFs and Tax-Aware Strategies to Diversify Low-Basis Stock
March 7, 2024
We illustrate how combining VPFs (variable prepaid forwards) with tax-aware strategies can help diversify low-basis stock and thereby improve after-tax wealth accumulation. Long-run after-tax wealth outcomes are significantly better when a VPF is combined with tax-aware long-short factor strategies rather than with other alternatives, such as a direct-indexing strategy or a market index fund.
Tax Matters
Making VPFs Work Harder for You
March 1, 2024
There is a range of solutions aimed at reducing the risk of concentrated stock tax-efficiently: completion portfolios, exchange funds, charitable giving, just to name a few. But for some investors, Variable Prepaid Forwards (VPFs ) are a favorite. It’s not hard to see why.
Tax Matters
The Enduring Appeal of Gain Deferral, Part 2
February 6, 2024
Our previous post showed the power of deferral for building wealth, but one key assumption in that analysis was that tax rates remain constant. In this post, we discuss whether gain deferral is still a good idea if you think tax rates might be higher in the future.
Tax Matters
The Enduring Appeal of Gain Deferral, Part 1
February 1, 2024
We find that strategies that help defer gains can be highly beneficial, irrespective of the investment horizon and especially over the long term.
Tax Matters
Inflation and Tax Efficiency
December 13, 2023
We discuss how inflation and taxes are linked, highlighting the value of tax efficiency when inflation is a feature of the macroeconomic environment.