After-Tax Performance Evaluation

Abstract

Focusing on after-tax returns is a great way to add value and gain competitive advantage in the investment management business. Managers need to understand the factors that affect tax efficiency, to realize that a one size fits all performance measure and tax strategy will not work, and to integrate portfolio management with income tax and estate tax planning. Algorithms, such as the accrual equivalent tax rate, can help managers educate clients about the various implications of taxes for their portfolios.