Despite the economic uncertainty caused by the pandemic—or possibly because of it—US retirement account balances rose to record levels during the fourth quarter of 2020, as reported by Fidelity Investments. The firm said individual contributions to individual retirement accounts (IRA), as well as 401(k) and 403(b) retirement accounts remained strong during the last three months of the year.
Applying a tax management framework to smart beta or factor portfolios provides beneficial after-tax outcomes. Among the factor portfolios tested, a tax management framework generally resulted in a less desirable pre-tax portfolio but is compensated for on an after-tax basis.
Advisors can use custom SMAs to help their clients pursue a range of goals. Fidelity's guide will explore four common use cases, including diversification away from concentrated positions and even accumulating capital losses for a future taxable event.