Tax Harvesting

We’ve been writing about tax harvesting on the blog since inception about six years ago.  It is one of those ideas that isn’t sexy, and doesn’t show up in client returns, but after tax can add some serious performance to a portfolio.  Estimates are often in the 0.5% to 1% range.  Most trend strategies are by nature tax efficient as they consistently sell small losers while holding onto long term gains.  We toyed for awhile with the idea of creating an online tax harvester program, and here is a recent post on the topic, but it is good to see someone tackling it with the recent news Wealthfront has added an automated tax harvesting module.  (They also have a white paper here on the topic.)

Techcrunch has an article on the launch, which is how I found the news, but it makes some misleading claims such as calling tax harvesting a “once-secret investing trick” and only available to “people with $10 to $20 million”.  Considering virtually every financial planner I know uses some form of tax harvesting at least at year end it is misleading.  Overall I really like Techcrunch, but their reporting on investing and the financial space has never been up to par.  I haven’t checked out the module on Wealthfront, but congrats to that team for at least being the first software to address/tackle the problem.