Make tax-smart investing part of your tax planning

You can work with a Fidelity advisor, who can explain the benefits of applying tax-smart investing techniques in your managed portfolio throughout the year. Because it's not what you earn, it's what you keep.

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More than tax-loss harvesting1

We use as many as 6 techniques in your managed portfolio2 at different times throughout the year to help improve after-tax returns.

Personalized strategies

Our team takes a personalized approach, tailored to your unique financial situation and investment preferences.

A proactive approach

Portfolio managers review all of your holdings, including individual purchase dates, in search of opportunities designed to reduce the impact of taxes on your investments.

The potential impact of tax-smart investing techniques over time3

As the accompanying graphic shows, employing tax-smart investing techniques over time may have a significant impact on your long-term returns. The longer you apply these techniques, the greater the potential impact.

Chart: This graphic seeks to illustrate the benefits of tax-smart investment management over time. In this hypothetical example, 4 different $1 million portfolios are fully invested on January 1 2002, 2006, 2011, and 2016. Each line represents the additional returns generated by tax-smart investing between the beginning date for each portfolio and December 31, 2018. For the portfolio created in 2002 an additional $415,609 in after-tax returns were generated. For the portfolio created in 2006 an additional $236,176 in after-tax returns were generated. For the portfolio created in 2012 an additional $46,095 in after-tax returns were generated. For the portfolio created in 2016 an additional $24,632 in after-tax returns were generated.
Each line represents a client's hypothetical value from tax-smart investing techniques at various starting dates, based on a starting portfolio value of $1 million.

Past performance is no guarantee of future results

Our tax-smart approach can help with year-round tax planning

We apply up to 6 tax-smart investing techniques in your managed portfolio at different times throughout the year, some as early as the day you fund your Portfolio Advisory Services account.

Tax-loss harvesting1

Unlike some investment firms, which wait until year end to search for tax-loss harvesting opportunities, we're looking at your managed portfolio throughout the year. This enhances our ability to offset any realized gains you may have in your account.

  • Tax-loss harvesting may offer significant benefits during volatile markets4

    As the graphic shows, periods of market volatility, while often difficult for investors, can also create opportunities. Very often the periods of greatest market volatility can lead to the highest number of tax-loss harvesting opportunities, which can help increase after-tax returns when markets recover. In 2019, Fidelity helped generate over $160 million5 in harvested tax losses across clients' Portfolio Advisory Services accounts.

    Chart: This graphic is intended to show how market volatility has the potential to create tax savings through tax-loss harvesting. Performance of Dow Jones US Total Market Index between January 2019 and December 2019 is shown to illustrate periods of market volatility, which are indicated by boxes. Cumulative tax savings created by tax-loss harvesting is shown to indicate how savings can often follow these periods of market volatility

    The right axis and blue line represent the movements of the U.S. stock market as measured by the Dow Jones U.S. Total Stock Market (Price Index).

Manage capital gains

When selling investments in your account, we'll generally first look to sell those that you've held for a longer time period, allowing us to take advantage of lower long-term capital gains tax rates.

Manage distributions

We work to manage your exposure to income distributed by the mutual funds in which you're invested, due to either capital gains or because the securities held by those funds pay dividends or interest.

Invest in municipal bonds

When selecting bond funds for your account, we consider a number of different factors. When it makes sense, we may purchase municipal bond funds that generate interest that may be exempt from federal taxes and, in some cases, state taxes.

Transition management

When it makes sense in the context of your chosen investment strategy, we search for ways to integrate your existing eligible holdings6 into your managed account as opposed to selling all of your existing investments in order to "start from scratch." This can help reduce the potential tax consequences of creating your personalized investment strategy.7

Tax-smart withdrawals

If you take money from your account, we'll seek to reduce the tax consequences of that. If withdrawals are planned, we'll seek to keep sufficient cash in your account. If they're unplanned, and we have to sell securities to fund them, we'll work to reduce the tax impact of those sales.

Wealth Management through Fidelity® Wealth Services

You'll have the opportunity to work with a dedicated Fidelity advisor who can help you understand the benefits of tax-smart investing techniques, help you create a flexible plan for your full financial picture, and provide access to personalized investment management.

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