Tax-Aware Investing:
Focus on What Your Clients Keep
Concentrated positions, embedded gains, and portfolio transitions often come with a tax bill. In four short videos, Opal’s investment team shows how a tax-aware approach can help.
Why Do After-Tax Returns Matter?
Tax-aware investing manages a portfolio for what clients keep after taxes, not just what it earns.
For advisors, the need usually starts with a specific client situation:
- 01A low-basis stock position that needs diversifying
- 02Appreciated holdings that make a portfolio change costly
- 03A client asking whether more can be done on taxes
In this series, Opal’s investment team walks through how a tax-aware approach works and which clients it may fit. Each video runs under three minutes and can be shared with clients.
What Is Tax-Aware Investing?
Tax-aware investing aims to improve after-tax returns by managing when and how gains and losses are realized. When a client holds a large gain, it adds a third option beyond selling now or holding and hoping: plan the exit.
How Does Tax-Aware Investing Work?
It puts declines to use and manages when taxes are paid. Harvested losses can offset gains elsewhere, and deferring a gain keeps more of a client’s capital invested and compounding.
Which Clients Benefit Most From Tax-Aware Investing?
It fits clients with long-held concentrated stock, private company shares approaching a sale, or portfolios carrying embedded gains. Planning ahead can help them diversify and reduce risk without one large tax bill.
How Does the Long-Short Overlay Help?
For clients with low-basis holdings, Opal’s Capital Gain Deferral SMA adds long and short stock positions around the existing position, so losses can be harvested in rising and falling markets. Those losses help offset gains as the position is gradually sold down.
What Are the Benefits for Your Clients?
Defer capital gains
Harvested losses help offset gains, so taxes can be paid over time rather than all at once.
Diversify concentrated positions
Reduce reliance on a single holding gradually, on a timeline that fits the client’s goals.
Keep more capital working
Money not paid in taxes today stays invested and compounding.
The long-short overlay uses leverage and carries higher fees and risk than traditional approaches. It requires a multiyear horizon, and tax benefits vary with individual circumstances.
Tax-Aware Investing FAQ
Tax-aware investing manages a portfolio for after-tax outcomes. It uses tools such as tax-loss harvesting, tax-lot management, and capital gains deferral to help clients keep more of what their portfolios earn.
No. Deferral changes when a tax is paid, not whether it is owed. Paying later keeps more capital invested and compounding. Assets passed to heirs may receive a step-up in basis, which can affect the eventual tax outcome.
Yes. Opal’s platform is modular, so tax-aware strategies can be added to an existing relationship. Bring a client situation to the Opal team to discuss whether it may be a fit.
Is a Tax-Aware Strategy Right for Your Client?
Bring the situation you’re evaluating. Our team will talk through whether a tax-aware approach may fit and what further review would involve.
Already Working With Opal?
Current AdvisorsTax-aware strategies can be added to your current relationship. Bring us a client situation and we’ll discuss whether it may be a fit.
Discuss a Client ScenarioNew to Opal?
Start HereSee how we help independent advisors solve tax-sensitive client situations while you remain the client’s advisor.
How We Work With Advisors →Important DisclosureThis material is provided for informational and educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective client. It is not investment, legal, or tax advice, and is not a recommendation or offer to buy or sell any security. Opinions are as of the date shown and may change without notice. All investments involve risk, including loss of principal. Leverage and short selling increase risk. Past performance is not a guarantee of future results. Illustrative figures are hypothetical and do not represent any actual client outcome. All investment management services are provided by Opal Capital, LLC (“Opal”), an SEC Registered Investment Advisor. Registration with the SEC does not imply a certain level of skill or training. Additional information is available in Opal’s Form ADV Part 1A, Form ADV Part 2A Brochure, and Client Relationship Summary at adviserinfo.sec.gov (SEC # 801-126398). Opal does not offer legal or tax advice. Please consult your attorney or tax advisor.