By Solomon G. Teller, CFA, Chief Investment Strategist, Green Harvest Asset Management
The S&P 500 was up 2.2% in June resulting in a 15.2% return for the first half of 2021. Even more impressive was the index has nearly doubled in value since the March 23, 2020 bottom. Investors who harvested tax losses, and maintained market exposure throughout, were again amply rewarded. Here are highlights of Green Harvest’s Tax Benefits Capture (TBC) activity last month along with accompanying statistics in the table on page 2:
- Despite the S&P 500’s rise, many sectors still experienced meaningful declines, enabling substantial TBC in new accounts and incremental TBC in established ones.
- In a reversal from May’s performance, the InfoTech and Consumer Discretionary sectors gained meaningfully while Materials and Financials retreated. Though the former sectors were TBC hotspots in May, in June the latter sectors accounted for more than a third of TBC-related trading.
- Utilities was the only sector to decline in both May and June. Not surprisingly, it’s where we found most of June’s TBC opportunities.
- Foreign markets lagged their U.S. counterparts; yet another reversal from May. The United Kingdom performed worst of all regions/countries covered and was where our foreign TBC activity was most prolific.
The varying performances among sectors and regions are a reminder not only of the volatility-dampening effects of diversification, but also its value in capturing tax benefits.
Hope everyone had a safe and wonderful July 4th weekend.
Disclaimers:
Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when the portfolio is liquidated. Current performance may be higher or lower than that quoted. Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index.
GHAM does not provide tax advice. Although GHAM does not employ a Certified Public Accountant on its staff, we have, and continue to work with outside accounting firms and outside tax counsel that provide ongoing guidance and updates on all relevant tax law. Federal, state and local tax laws are subject to change. GHAM is not responsible for providing clients updates on any changes in tax laws, rules or statutes.
Reasons to harvest capital losses, sources of capital gains and the suggestion that mutual funds distribute capital gains are for example purposes only and not meant to be tax, estate planning or investment advice in any form or for any specific client.
All performance and estimates of strategy performance, after tax alpha, after tax alpha opportunities and other performance figures are derived from data provided from multiple third-party sources. All estimates were created with the benefit of hindsight and may not be achieved in a live account. The data received by GHAM is unaudited and its reliability and accuracy is not guaranteed.
The availability of tax alpha is highly dependent upon the initial date and time of investment as well as market direction and security volatility during the investment period. Tax loss harvesting outcomes may vary greatly for clients who invest on different days, weeks, months and all other time periods.
All estimates of past returns of broad, narrow, sector, country, regional or other indices do not include the impact of advisor fees, unless specifically indicated. Past performance and volatility figures should not be relied upon as an indicator of future performance or volatility.
This material is not intended to be relied upon as legal, investment or tax advice in any form or for any specific client. The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person. All investments carry a certain degree of risk, and there is no assurance that an investment will perform as expected over any period of time.
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