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Strategies

Tax-Advantaged Equity

Established strategies seeking to maximize after-tax returns through active tax management.

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Principles of Investing

Take Advantage of Volatility, in Every Market Environment

When global markets decline, tax-savings opportunities are prevalent, but those events are less frequent. Finding opportunities within up markets is critical to generating a higher after-tax capital base.

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Hypothetical Illustration: Deferred vs. Realized Gains

Deferring gains keeps money in the portfolio. A hypothetical portfolio which defers gains ended up 25% more valuable after 20 years than the portfolio in which taxable gains were realized each year.

Principles of Investing

Take a Multi-Dimensional Approach to Maximize After-Tax Growth

Asset transitions can create large tax liabilities and unnecessary gains if managed as a one-off event – performing regular analysis across investor-specific scenarios is necessary to ensure assets can be optimally transferred, as needed.

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Percentage of Stocks That Had a Decline By Calendar Year

Take advantage of volatility, in every market environment. Tax harvesting opportunities exist in any market. More than 87% of stocks tend to have a decline during the year, even when the S&P 500 returns over 25%.

From 2003–2023, on average 92.3% of stocks had a decline during the calendar year compared to its stock price at prior year-end. When the S&P 500 returned over 25% in a year, on average 87.5% of stocks had a decline.

Principles of Investing

Tailor the Strategy to the Investor

Creating true after-tax alpha requires a personalized approach – even the most efficiently managed U.S. equity strategies could leave you with 10%+ tax liability.

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Focusing on Efficient Portfolio Transitions

Sample asset transition scenarios. Portfolio transitions provide another opportunity to defer gains.

For Illustrative Purposes Only. Tax rates assumed to be 40.8% Short Term, 23.8% Long Term.

*Tracking Error measures the standard deviation of the difference between the investment performance of the strategy or fund and that of the index. There is no guarantee that tracking error targets can be achieved; actual or experienced tracking error can deviate significantly.

**Buy Turnover provides the amount that is most likely to generate future losses. Within the first 12 months of investment, NTAM expects to harvest 5–10% of the Buy Turnover in short-term losses.

Approach

Without tax management of their investments, taxable investors realize a “tax drag” that hurts their wealth accumulation, compounding over time. We actively trade portfolios throughout the year to outperform investors’ chosen benchmark on an after-tax basis while managing active risk.

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    Contact Us

    Interested in learning more about our investment strategies? 

    The information contained herein is intended for use with current or prospective clients of Northern Trust Investments, Inc (NTI) or its affiliates. The information is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. Northern Trust Asset Management’s (NTAM)  and its affiliates may have positions in and may effect transactions in the markets, contracts and related investments different than described in this information. This information is obtained from sources believed to be reliable, its accuracy and completeness are not guaranteed, and is subject to change. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor.

    This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are the property of their respective owners. Information is subject to change based on market or other conditions.

    All securities investing and trading activities risk the loss of capital. Each portfolio is subject to substantial risks including market risks, strategy risks, advisor risk, and risks with respect to its investment in other structures. There can be no assurance that any portfolio investment objectives will be achieved, or that any investment will achieve profits or avoid incurring substantial losses. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Risk controls and models do not promise any level of performance or guarantee against loss of principal. Any discussion of risk management is intended to describe NTAM’s efforts to monitor and manage risk but does not imply low risk.

    Environmental, Social and Governance (ESG) investing involves certain risks because the methodology of an underlying index selects and assigns weights to securities of issuers for nonfinancial reasons, a strategy may underperform the broader equity market or other strategies that do not utilize ESG criteria when selecting investments. The companies selected by an index provider as demonstrating ESG characteristics may not be the same companies selected by other index providers that use similar ESG screens. In addition, companies selected by an index provider may not exhibit positive or favorable ESG characteristics. Regulatory changes or interpretations regarding the definitions and/or use of ESG criteria could have a material adverse effect on a strategy’s ability to invest in accordance with its investment policies and/or achieve its investment objective. 

    Past performance is not a guarantee of future results. Performance returns and the principal value of an investment will fluctuate. Performance returns contained herein are subject to revision by NTAM. Comparative indices shown are provided as an indication of the performance of a particular segment of the capital markets and/or alternative strategies in general. Index performance returns do not reflect any management fees, transaction costs or expenses. It is not possible to invest directly in any index. Net performance returns are reduced by investment management fees and other expenses relating to the management of the account. Gross performance returns contained herein include reinvestment of dividends and other earnings, transaction costs, and all fees and expenses other than investment management fees, unless indicated otherwise. For U.S. NTI prospects or clients, please refer to Part 2a of the Form ADV or consult an NTI representative for additional information on fees.

    Forward-looking statements and assumptions are NTAM’s current estimates or expectations of future events or future results based upon proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve.  Actual results could differ materially from the results indicated by this information.

    Not FDIC insured | May lose value | No bank guarantee 

    Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.