November 2018 Portfolio Insights

Our differentiated approach to financial planning is based on the integration of investment management and tax planning services.  Intertwining the two services allows us to develop and implement optimal wealth management solutions for our clients.  We construct customized client portfolios within the context of your specific objectives, ability to accept market volatility, and liquidity needs.  Additionally, we aim to deliver superior risk-adjusted returns over the long run on an after-tax basis.  We have a deep appreciation for the tax implications of our portfolio construction and portfolio management decisions.  Independent research suggests that up to 200 basis points of performance can be generated through active tax management.  For example, in order to drive performance, we favor tax-efficient (i.e. low turnover) investment strategies, are deliberate with respect to asset placement (e.g. we prefer to hold less efficient strategies in tax-deferred accounts), and evaluate the tax consequences of potential portfolio shifts.  We analyze each client portfolio separately and determine the appropriate action.

Furthermore, an important tax-mitigation strategy is tax-loss harvesting which refers to selling a security in a taxable account for a loss to offset taxes on realized gains and/or income.  The proceeds are used to purchase a similar security to maintain the desired portfolio allocation.  After 30 days, the alternate security may be sold and the original security repurchased.  However, if the alternate is substantially identical to the original security, or the original security is repurchased within 30 days, the Internal Revenue Services will classify the transactions as a wash sale and disallow the loss.  While tax-loss harvesting opportunities arise due to an underperforming asset, they are a thoughtful means to lower taxes while maintaining portfolio allocations.

In light of recent market volatility, we have identified several tax-loss harvesting opportunities across client portfolios and have begun to implement them.  We wanted to make you aware as there may be increased activity in your portfolio over the coming days and weeks.  Presently, we are targeting positions held at losses in excess of $5,000.  As mentioned, we are analyzing each client portfolio separately and determining the appropriate action.

A logical question is whether we will rotate into the harvested securities once 30 days have passed.  Consistent with our investment philosophy and process, we are continuously evaluating our investment selections to determine whether they should remain our preferred means to access a particular asset class or sector.  We will continue to monitor these securities, along with the broad investment universe, and make adjustments as necessary.

If you have questions about this information or your investment portfolio, please contact a member of the Investment Research Team or your Advisor.

The information contained herein has been obtained from sources believed to be reliable, and its accuracy and completeness is not guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The views and other information provided are subject to change without notice. This site is issued without regard to the specific investment objectives, financial situation or particular needs of any specific recipient and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results.


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Heritage Wealth Advisors is an SEC-registered investment advisor. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from Heritage. Heritage is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of Heritage’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at Copyright ©️ 2023 Heritage Wealth Advisors, all rights reserved.

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