Schwab to create 'tax-aware' strategy that's been attracting billions from wealthy investors
Wealthy investors are flocking to tax-aware long short strategies, adding billions into these super-powered versions of tax-loss harvesting accounts.
TL;DR
- Charles Schwab plans to launch its own version of tax-aware long-short strategies.
- These strategies have attracted substantial assets from wealthy investors, with total assets estimated to have surged to over $170 billion.
- The growth is driven by the need for wealthy individuals, business owners, and executives to shield capital gains from taxes.
- Tax-aware long-short strategies add leverage to both long and short positions to generate more potential losses for harvesting.
- The government has shown increased interest in tax avoidance strategies, but 'tax-aware' itself is not inherently a concern.
- Schwab CEO Rick Wurster indicated the offering would leverage existing direct indexing capabilities and could offer monetization opportunities.