Fidelity Investments

Tax management or tax-loss harvesting is not a new concept to the investment world. What is commonly referred to as "direct indexing," a popular equity implementation, in many cases seeks to closely replicate the performance and risk profile of a specific index by investing directly in the underlying securities.

In this article, researchers with Fidelity Investments examine the effectiveness of tax management overlayed on various equity factor portfolios.

Advisors can use custom SMAs to help their clients pursue a range of goals. Fidelity's guide will explore four common use cases, including:

Custom SMAs offer a sophisticated approach to portfolio management that can allow investors to access a variety of benefits. Custom SMAs can be tailored to personal investment goals, adjusting their holdings to suit a variety of investment styles and preferences while remaining focused on tax planning and tax management.

Fidelity has identified four common scenarios where Custom SMAs can provide solutions:

Advisors face stiff competition in the race to meet rising investor expectations, putting a premium on scale and differentiation. The rise of direct indexing has shone a spotlight on the potential for customized separately managed accounts (custom SMAs) to help in this effort.

Quantitative capabilities drive unique value: The automation and scale offered through these solutions has the potential to significantly impact this race by enabling advisors to efficiently deliver highly personalized portfolios with potential for after-tax outperformance.

Investment strategy has never been a one-size-fits-all process. When it comes to investing and retirement planning, the strategic use of separately managed accounts (SMAs) is one personalization strategy that advisors are employing with their clients to meet their investing needs.